29 June 2010

The value of UK residential property rose in June, but only by 0.1%, according to the building society Nationwide. This slight increase comes following a 0.5% rise in May, with the average home now costing over £170,000.

The Nationwide house price index has shown that property values are 3% higher since the beginning of 2010. To contrast, the annual house price inflation level fell to 8.7%, with house values rising more steadily than they did a year ago.

Martin Gahbauer, Nationwide’s chief economist, stated: “Recent indicators point to an increase in the supply of property coming to the market for sale, perhaps in response to the abolition of HIPs in the opening days of the new coalition government.”

He added: “With the level of demand remaining broadly stable, this would in part help to explain the recent slowdown observed in the rate of house price inflation.”

Gahbauer also indicated that he expect the annual rate of house price inflation to keep decreasing, as a result of the unusually high prices experienced in the summer of 2009.

In addition, the change to the top rate of capital gains tax to 28%, to be paid when people sell or give away property, is unlikely to have a major effect on the supply of properties on the market.

Robin King, movewithus director, commented: “As we expected this is a budget aimed at assisting small to medium businesses. The VAT rise to 20% in January next year has left a current window of opportunity, which should see stimulation in the sales of taxable goods. In terms of property the market should remain relatively stable, as the capital gains tax rise to 28% for higher earners is not as bad as the 40% bracket feared by some. As a result there should be no great influx in the supply of property to the market as buy-to-let owners are less likely to rush to sell their second homes.”

Source: BBC News

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