Cooling off for summer

What now for UK house prices?

The spring months from March to May, have seen fluctuating levels in property transactions. Landlords rushed to snatch their next buy-to-let property before the stamp duty rules changed on 1 April, creating a surge in transactions, and inflated house prices. However, things seem to be cooling off in the run up to summer.

Declining annual rate of UK house price growth

The annual rate of house price growth has decreased further on the previous two months, according to figures by Nationwide Building Society.

May – 4.7%
April – 4.9%
March – 5.7%

Property purchase activity in March was exceptionally high as property investors surged the market to beat the stamp duty land tax 3% surcharge that has been in place since 1 April 2016.

Figures from the Bank of England (BoE) also showed slow down in the number of approvals for home loans. In April, 66,250 mortgages were approved, which was the lowest number in 11 months. Taking the average number of transactions for the previous six months showed a circa 7% fall in April.

Many property investors paid inflated house prices to negotiate deals before the tax deadline, and with a surplus of buyers compared to available properties, the house prices in March were driven upwards.

Will house prices sizzle again over summer?

If you are looking to sell your house, you may be wondering if you have missed the boat on selling your property at the highest price.

On the other hand, if you are looking to buy, you may be hopeful this downward spiral continues and gives you the break you have been waiting for to afford to purchase your first home.

In short, with the EU Referendum looming there are mixed opinions on the market as to the future of the UK housing market. In addition, it is still early days after the buy-to-let shake-up, and time will tell as to how much of an impact the new tax legislation will have on property investment.

The general feeling is that house purchase activity will continue to fall over the summer months. So first-time buyers this could be your opportunity.

“House purchase activity is likely to fall in the months ahead, given the number of purchasers that brought forward transaction” Robert Gardner, Chief Economist at Nationwide

However, it is also expected that with low borrowing costs, the housing market will steadily increase in activity again once the stamp-duty related volatility has passed.

This is of course, subject to the continual recovery of the economy and the effects of the decision on 23 June, which could determine the fate of the market for several years to come.