Nationwide data shows house prices slowed more than expected in May
The impact of stamp duty changes in April and further tax changes on buy-to-let investors is having an impact.
According to data published by Nationwide, house prices climbed 0.2% month-on-month in May, matching the rate of growth recorded in April but falling short of analysts’ expectations for a 0.3% gain. The Nationwide said that the cost of the average home in the UK had risen to £204,368.
The figure was also the joint-weakest reading since November 2015. On a year-on-year basis, prices rose 4.7%, in line with forecast but slightly below the 4.9% rate of growth recorded in April.
“In the near term, it’s going to be difficult to gauge the underlying strength of activity in the housing market due to the volatility generated by the stamp duty changes which took effect from 1 April,” said Robert Gardner, Nationwide’s chief economist.
“House purchase activity is likely to fall in the months ahead given the number of purchasers that brought forward transactions.”
He added economists expect the recovery to be reasonably steady after that, particularly in the buy-to-let sector.
“Nevertheless, healthy labor market conditions and low borrowing costs are expected to underpin a steady increase in housing market activity once stamp duty related volatility has passed, providing the economic recovery remains on track,” he said.
Legal & General Mortgage Club director Jeremy Duncombe says: “Once again, house prices are rising at a seemingly unstoppable rate. Whilst many homeowners may be enjoying these perpetual increases in property value, for the overall health of the market, this is far from good news.
“A generation of aspiring homeowners are increasingly finding themselves priced out of the market, with property prices rising over four times faster than wages in some areas of the UK.”