U.K. House Prices Increase on Buyer Surge to Beat Government Tax Increase
U.K. house prices rose in April as buyers rushed to beat a sales-tax increase, research company Acadametrics Ltd. and LSL Property Services Plc said.
The average price of a home in England and Wales increased 0.3 percent from March to 223,352 pounds ($363,300), the groups estimated in an e-mailed report in London today. From a year earlier, prices were up 0.9 percent.
The government raised a property transfer tax known as stamp duty for homes costing more than 1 million pounds in April as part of measures to tackle the budget deficit. The property- market recovery may still struggle to sustain momentum this year as banks maintain tight lending standards.
“Rising prices at the top of the market have held up property prices,” said David Newnes, managing director at LSL. “The market remains hampered by tight mortgage lending. The prospect of a rise in unemployment will create growing uncertainty as the year goes on.”
Chancellor of the Exchequer George Osborne increased stamp duty to 5 percent from 4 percent on April 6. Acadametrics said the number of properties above the 1 million-pound threshold sold in the first five days of the month was more than the historical average for the month.
Three of the 10 regions tracked by the groups showed increases in April from March, with the biggest gains in London and the South East, which have a higher proportion of properties above 1 million pounds.
The number of transactions fell about 6 percent in April, due to consecutive bank holidays to mark Easter and the wedding of Prince William and Kate Middleton. The total was the second lowest for the month since records began in 1996, the report said. April normally shows a monthly increase of 2.3 percent.
Bank of England data this month showed lenders granted 47,775 home loans in March, less than half the levels seen around the peak of the housing boom at the end of 2006.
A report today by e.surv chartered surveyors showed credit availability may be improving. Homes selling for less than 125,000 pounds accounted for 27 percent of mortgage approvals in April, up from 20 percent a year earlier. Conditions for first- time buyers are improving, e.surv said, as the average loan for the cheapest homes rose to 68 percent of the property’s value from 64 percent.
Other reports on the property market this week have been mixed. The Royal Institution of Chartered Surveyors said May 10 its house-price gauge rose to the highest level in nine months in April. Lloyds Banking Group Plc (LLOY)’s Halifax division said a day earlier prices fell 1.4 percent, the most in seven months.
Households are under pressure from the government’s fiscal squeeze and inflation that’s twice the central bank’s 2 percent target. The number of properties repossessed by banks rose 15 percent in the first quarter to 9,100 from the previous three months, the Council of Mortgage Lenders said yesterday.
Acadametrics and LSL combine initial housing transaction data from the U.K. Land Registry and results from other price measures to produce an estimate for the most recent month. That number is then revised in following months.
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