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Home Prices in UK Decline as Deadline for Property Tax Looms

Posted by Staff Reporter on May 09, 2016 09:55 AM EDT
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LONDON, UNITED KINGDOM - DECEMBER 9: The modern tower of 20 Fenchurch Street, also known as The Walkie-Talkie, rises behind a gothic tower of the St. Pancras Renaissance Hotel at sunrise on December 9, 2014 in London, England. (Photo : Jim Dyson/Getty Images)

For the month of April, UK home prices declined after a number of investors for the leasing sector rushed to beat the new property tax deadline. According to a report from The NationalAE, it quoted a recent Halifax report showing the said price decline.

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The average values of homes in the UK fell by as much as 0.8 percent from March's figures. This translated to a decline in annual gain from 11 percent in March to just 7.8 percent in April. When measured on a quarterly basis, prices rose only by 1.5 percent.

The prices rose as inventory fell due to high demand from buy-to-let landlords and other property investors who sought to avoid the newly imposed stamp duty for second homes. This was exacerbated by the UK economy slowing down as well as the "Brexit" issues come the EU referendum that will happen in the next few months.

According to Halifax economist Martin Ellis, "Current market conditions remain very tight as the severe imbalance between supply and demand persists. This situation, combined with low interest rates and rising employment and real earnings, should continue to push house prices up over the coming months."

In a related report, this time from, a record of 165,400 UK properties were sold in March before the imposition of the tax. This was 11 percent higher than the previous high achieved last January 2007, as confirmed to HM Revenue and Customs records.

IHS Economics Chief Economist Dr. Howard Archer highlighted the shadow of the EU referendum looming over the horizon, possibly reining in housing market transactions in the coming months. He added, "Nevertheless, we expect housing market activity to regain limited momentum in the second half of 2016 on the assumption that a vote to stay in the EU reduces uncertainty and supports a pick up in economic activity."

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