UK housing activity may cool in the coming months after a tax change boosted the market in the first quarter, though the underlying momentum is one of continued price gains, Nationwide Building Society said.
The average price of a home rose 0.2 per cent to £204,368 ($296,000) in May, matching the pace in April, the lender said on Wednesday.
From a year earlier, values rose 4.7 per cent, down from 4.9 per cent in April.
A rush of investors trying to beat a tax change in April put a temporary skew on the housing market, and Nationwide said it’s difficult to gauge underlying strength through the volatility.
While that effect will dissipate, more fundamental drivers such as record-low interest rates and an improving economy may mean further increases in values in the coming months, it said.
“House purchase activity is likely to fall in the months ahead given the number of purchasers that brought forward transactions,” Nationwide Chief Economist Robert Gardner said.
“However, it is possible that the recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will tilt the demand/supply balance in favor of sellers and exert upward pressure on price growth once again.”
He cited survey data showing the number of properties on estate agents’ books is close to the lowest since the late 1970s.
© 2016 Bloomberg L.P
