LONDON, July 28 (Reuters) – British house prices fell in July after a coronavirus emergency tax break for buyers was scaled back at the end of June but demand for bigger homes as a result of the pandemic is likely to support the market, mortgage lender Nationwide said.
In monthly terms, house prices fell by 0.5% from June, their first fall since March, slowing the annual increase to 10.5% from June’s leap of 13.4% which was the steepest rise in 17 years.
Economists polled by Reuters had expected a less marked cooling of the market, predicting prices would rise by 0.6% from June and by 12.1% in annual terms.
Nationwide’s chief economist Robert Gardner said the rush to qualify for the full tax break – housing transactions hit a record in June, according to official data – meant savings from the incentive had been dwarfed by the surge in house prices.
Gardner said July’s slowdown had been expected after the run-up in prices which rose by an average of 1.6% a month over the April-to-June period, more than six times the average monthly gain during the five years before the pandemic.
“Underlying demand is likely to remain solid in the near term,” he said.
Improved consumer confidence, low borrowing costs and a shortage of homes on the market would provide support for house prices despite an expected rise in unemployment as the government scales back its pandemic jobs support programme.
