News
House prices edge up
House prices edged up again in June according to the Nationwide House Price Index taking the average price of a UK property to £170,111 compared to £169.162 in May. Over the first half of 2010,house prises have risen by a cumulative 3%.It seems that there has been am increase in the supply of property coming onto the market possibly as a result of the abolition of the need for Home Information packs (HIPS)
Commenting on the recent emergency budget Martin Gahbauer Nationwide’s Chief Economist said “The most directly relevant policy change for the housing market was the decision to raise the capital gains tax (CGT) rate for higher earners from 18% to 28%. An increase in CGT for second home owners had already been flagged well in advance of the Budget. However, there were fears that the rate could be brought into line with higher rates of income tax, which could have seen it rise to 40% or even 50%. The actual increase has therefore turned out to be relatively modest.”
Commenting on Nationwide House Price Index, Simon Rubinsohn, Royal Institute of Chartered Surveyors (RICS) chief economist said “The latest data from Nationwide shows house prices edged up by just 0.1 per cent in June. This the smallest monthly gain since February 2010, when prices on this series dropped by 0.9 per cent, and before that, from April last year. The flatter trend in prices which now appears to be emerging is consistent with evidence that fresh supply onto the market is beginning to outstrip new buyer enquiries. Indeed, the decision to abolish HIPs is likely to encourage an increase in new instructions to estate agents if the results of the latest RICS survey are anything to go by; according to this, the supply of property onto the market is expected to rise by around 15 per cent.
“With Nationwide numbers suggesting house prices on average across the country are now less that 8 per cent away from the all-time high (in London they are just over 4 per cent away from the peak), it is no bad thing the price picture appears to be stabilising. The more important issue for the market is whether this is accompanied by a pick-up in transaction activity. The increase in choice for purchasers as more property comes to the market is a healthy development which, in conjunction with the stamp duty holiday for first-time buyers, could see sales volumes increase a little from current disappointing levels. However, with mortgage finance still being heavily rationed and consumer confidence slipping in the wake of the tough budget, it would be wrong to expect turnover to rise markedly over the balance of this year.”
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