- Nationwide says values increased 0.8% on month in March
- Annual rate of growth is 5.7%, strongest since Feb. 2015
U.K. house prices increased for a ninth month in March as rental investors rushed to purchase property before a tax increase, Nationwide Building Society said.
The average price of a home rose 0.8 percent from February to 200,251 pounds ($287,280), the lender said in a statement on Friday. The annual rate of growth surged to 5.7 percent, the strongest in more than a year.
A shortage of homes for sale is being aggravated by landlords trying to buy investment properties before a tax change on second homes takes effect this month. With demand also being boosted by low borrowing costs, the Bank of England has warned that risks in the property market are rising.
“The pace of house-price growth may moderate again once the stamp duty changes take effect in April,” Nationwide Chief Economist Robert Gardner said in a statement. “However, it is possible that the recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will keep the demand/supply balance tilted in favor of sellers and maintain pressure on price growth.”
U.K. Chancellor of the Exchequer George Osborne is boosting the transaction tax by three percentage points for landlords and purchasers of additional homes, saying they may be pricing first-time buyers out of the market. The BOE has raised concerns that the mortgages may pose risks to financial stability, citing uncertainty about how landlords will behave if prices fall or costs of repayment increase.