U.K. House Prices Decline to Lowest Level in 17 Months, Acadametrics Says
U.K. house prices dropped for a third month in June to their lowest level in 1 1/2 years as a purchase-tax increase and a lack of mortgage finance deterred buyers, Acadametrics Ltd. and LSL Property Services Plc said.
The average price of a home in England and Wales fell 0.8 percent to 219,365 pounds ($350,500) from May, when it also decreased 0.8 percent, the groups said in an e-mailed report in London today. Prices fell 1.4 percent from a year earlier.
The decline partly reflected a drop in demand for homes worth more than 1 million pounds after the government raised stamp duty, a property-transfer tax, in April to help tackle the budget deficit. The housing market may struggle to gain momentum this year as banks restrict lending and inflation outpaces growth in wages.
“The modest gains in house prices over the last 18 months have disappeared,” Peter Williams, chairman of Acadametrics, said in the report. “A significant squeeze on household budgets is under way given high inflation, rising taxation and falling real incomes. If the economy’s growth slows as many expect, these pressures will intensify.”
Out of the 10 regions tracked, eight posted falls in the past three months compared with a year earlier. Prices in northwest England led declines with a 4.8 percent drop, while London posted a 5 percent gain. In May, values in the capital decreased 1.4 percent on the month.
“Putting the fall down solely to high-value homes would ignore the weakness in the present market,” said David Newnes, managing director of LSL. The regional declines in the past three months indicate “the impact of the continuing shortage of mortgage finance,” he said.
The Bank of England kept its benchmark interest rate at a record low of 0.5 percent yesterday as the threat to the recovery took precedence over an inflation rate that is more than double the central bank’s 2 percent goal.
Acadametrics and LSL estimate the number of transactions in June rose 20 percent to 61,000 from an “unusually low” May.
The groups combine initial transaction data from the U.K. Land Registry and results from other price measures for an estimate for the most recent month.
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