- There was a sharp fall in property values in May – dipping 0.4% - following a surge in activity earlier in the year
- Weakest May for home sales in five years, after stamp duty surcharge caused a rush of buy-to-let sales in March
Adrian Gill, director of Reeds Rains estate agents, comments: “There was a sharp fall in property values in May (dipping 0.4%) following a surge in activity earlier in the year, when many landlords and house buyers brought forward their purchases to avoid the stamp duty surcharge.
“The year-on-year growth in house prices has also slowed, decelerating to 6.8% in May, from 7.7% in April. With the Chancellor predicting that a Brexit from the EU would reduce property values by at least 10%, many buyers are holding off until after the uncertainty surrounding the referendum has been resolved.
“With so much uncertainty in the UK economy, home sales have also been subdued. While the total number of property sales did increase from the previous month, this month has seen the fewest May property sales since 2011, when the UK was still recovering from the recession. This uncertainty surrounding the EU referendum will not be resolved until 23rd June at the earliest. However, home sales for the first five months of the year are still 3% higher than the same period in 2015, due to the investment from landlords earlier in the year. This suggest that over the long-run, landlords won’t be put off by the reduction in mortgage tax relief, as many believe the sector will still be profitable despite the Government’s attempts to drive them out of the market”.
Source: LSL/Acadata England & Wales House Price Index, May 2016