UK house price growth slows in April, Nationwide reveals

UK house price growth slowed in April following a rush of purchases ahead of higher taxes on second homes and buy-to-let properties, data showed on Thursday.

The annual pace of house price growth eased to 4.9% this month after a 5.7% increase in March, Nationwide said.

Between March and April prices rose 0.2%, the lowest monthly increase since last November. It compared to a month-on-month rise of 0.7% in March.

The surge in house prices in March was driven by demand for second home purchases and buy-to-let properties ahead of extra stamp duty charges on 1 April.

“House purchase activity is likely to fall in the months ahead given the number of purchasers that brought forward transactions,” said Robert Gardner, chief economist at Nationwide.

“The recovery thereafter may also be fairly gradual, especially in the buy-to-let sector, where a wealth of other policy changes, such as the reduction in tax relief for landlords from 2017 are likely to exert an ongoing drag.”

Gardner added that there was also risk that the jump in house purchases in recent months could see the shortage of homes on the market worsen. RICS has revealed the number of properties on estate agents’ books was close to all-time lows on data extending back to the late 1970s, he noted.

Howard Archer, chief UK and European economist at IHS Global Insight, said the shortage of properties on the market will likely provide support to house prices as demand outstrips supply.

However, he warned that house prices may soften over the next few months due to uncertainty leading up to Britain’s 23 June referendum on European Union membership.

“Nevertheless, we still expect house prices to post relatively solid increases over 2016 as a whole – likely by around 5% on the Nationwide measure – with support coming from a relative shortage of properties as well as decent buyer interest,” he said.

“High employment, decent purchasing power and the probability that interest rates will not rise for some considerable time to come (and highly unlikely in 2016) should underpin buyer interest.”