New taxes put brakes on UK property price growth

Increased economic and political uncertainty ahead of the UK referendum on EU membership may also be weighing on market.

British annual house price growth cooled in April after the government introduced extra taxes on purchases of properties for rental and second homes, according to a survey from mortgage lender Nationwide on Thursday.

House price growth eased to 4.9 per cent year-on-year from 5.7 per cent in March.

On the month, house prices edged up 0.2 per cent. Nationwide said the slowdown followed a surge of activity in March ahead of an April 1 increase in the stamp duty land tax for second home purchases. This was most pronounced in the so-called buy-to-let market for rental homes.

“Current increased domestic economic and political uncertainties could also be reining in housing market activity, especially in the run-up to June’s EU referendum,” said Howard Archer, an economist at IHS Global Insight.

But Nationwide said strong jobs growth and rising real wages could put increased pressure on house prices in future, given an imbalance between supply and demand.

“Moreover, there is a risk that the surge in house purchases in recent months will exacerbate the shortage of homes on the market,” Nationwide chief economist Robert Gardner said, citing data from the Royal Institution of Chartered Surveyors (Rics).

Rics said earlier that international investor interest in British commercial property had all but dried up in the run up to the June 23 referendum on Britain’s European Union membership.

Nationwide did not mention the risk of Brexit as an influence on house prices.