UK House Prices Experience Largest Monthly Drop Since 2023
(Reuters) -British house prices fell by 0.6% in April, a sharper fall than forecast and their biggest monthly decline in more than 18 months, as a discount on property transactions ended, data from mortgage lender Nationwide showed on Wednesday.
The month-on-month drop was the first fall since August last year when prices declined by 0.1%, and the largest since August 2023, when they also fell by 0.6%. April's monthly number was weaker than all forecasts in a Reuters poll of economists which had pointed to a flat reading after prices stagnated in March.
House prices were 3.4% higher than a year ago, below a 3.9% rise in March and lagging a consensus for a 4.1% annual increase.
Robert Gardner, Nationwide's chief economist, said he had expected house price growth to soften this month due to the changes in property taxes.
"Early indications suggest there was a significant jump in transactions in March, with buyers bringing forward their purchases to avoid additional tax obligations," Gardner said.
On April 1, Britain's government lowered the price threshold at which homebuyers become eligible to pay property transaction taxes - known as stamp duty.
First-time homebuyers in England will now pay stamp duty on property costing 300,000 pounds ($401,970.00), rather than 425,000 pounds, while other buyers will have to pay tax from 125,000 pounds. A tax surcharge for second homes also increased by two percentage points to 5%.
Gardner said activity in the housing market was likely to pick up in the warmer months despite wider economic uncertainties.
Bank of England data earlier this month showed lenders expected demand for mortgages to level off in the coming months.
Investors on Wednesday fully priced in that the Bank of England would cut interest rates by a quarter-point to 4.25% from 4.5% in May.
($1 = 0.7463 pounds)
(Reporting by Suban Abdulla; editing by Sarah Young and Kate Holton)
