House prices have fallen at their fastest pace in five years as investors await the outcome of the EU referendum. The dip comes after a surge in buying as landlords rushed to beat the stamp duty on 1 April.
The latest House Price Index from Your Move and Reed Rains suggests that economic uncertainty surrounding the upcoming EU referendum has played a significant role in causing property values across England and Wales to drop 0.4% in May.
This is the steepest fall since November 2011 and leaves the average price of a house at £293,599. On an annual basis prices have risen 6.8%.
Adrian Gill, director of Your Move and Reeds Rains estate agents, said: “The housing market is holding its breath ahead of the EU referendum and after a rapid sprint at the start of the year.
“May’s correction in property values also follows on from a surge in activity earlier in the year, when second-home buyers and landlords brought forward their purchases to avoid the stamp duty surcharge. That tax hike and the government’s anti-landlord policies are weighing down the market, but the main factor is short-term confidence ahead of the 23 June referendum.”
After last month’s record high, house prices in London fell 0.3% (£1,769) to just below the £600,000 mark. The value of a typical home in the city is now £598,421.
Gill said: “In the three months between February and April, sales of homes in London increased by 15%, compared to the same period last year. The majority of this upswing in sales came from flats. As landlords often prefer to provide flats to rent, these properties were a popular choice before the stamp duty surcharge came into force in April.”
One area bucking the trend though is Slough, jumping 23.3% year on year, with values lifted by Crossrail and new tech jobs.
Gill said: “The price of a terraced house in slough is now £63,000 more than it was a year ago. Property values in Slough have been boosted by the new Crossrail development, with a new terminus coming into operation in late 2018. The increase in tech jobs in the town has also helped to lift prices, with O2, Nintendo, BlackBerry and McAfee all located along what has been recently branded the Silicon Alley.”
