British house prices saw a faster increase than expected in May. This new rise proves to be a rebound from a dip in April caused by new tax regulations, Halifax’s house price index revealed.
Halifax stated that house prices went up by 0.6% in May, double the rate originally forecast by a Reuter’s poll of economists and massively reversing the 0.8% dip experienced in April.
“The strength of demand, combined with very low supply, is causing house prices to rise at a brisk pace,” Halifax housing economist Martin Ellis said.
In the three months to May, prices were 9.2% higher than a year earlier. That’s the same rate of increase as in April and the slowest since November.
April’s mortgage data from the Bank of England showed the weakest net lending growth since the depth of the euro zone debt crisis in 2012, and the sharpest fall in mortgage approvals in 2 years.
House price data collect by Halifax always shows a slightly faster rate of house price rises than other indexes. Rival mortgage lender Nationwide revealed a 4.7% annual rise in prices for May.
The Royal Institution of Chartered Surveyors stated that last month constituted the biggest fall in demand from buyers since 2008. At the same time, Halifax’s Ellis said he expected price rises to slow later in the year as price rises continue to outpace the growth of earnings.
“Increasing affordability issues, caused by a sustained period of higher-than-earnings house price growth, should curb housing demand and result in some slowdown in house price growth as the year progresses,” he said.
