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UK house prices unexpectedly dip in March - Nationwide

Wed 31 March 2021 07:55 | A A A

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(Sharecast News) - UK house prices unexpectedly dipped in March ahead of the original deadline for the stamp duty holiday, according to a survey released on Wednesday by Nationwide.

House prices fell 0.2% on the month following a 0.7% increase in February, and versus expectations for a 0.4% rise.

On the year, prices jumped 5.7% in March following a 6.9% jump the month before and compared to expectations of a 6.4% increase.

Nationwide's chief economist, Robert Gardner, said: "Given that the wider economy and the labour market has performed better than expected in recent months, the slowdown in March probably reflects a softening of demand ahead of the original end of the stamp duty holiday before the chancellor announced the extension in the Budget.

"Recent signs of economic resilience and the stimulus measures announced in the Budget, including the extension of the furlough scheme and the stamp duty holiday, as well as the introduction of a mortgage guarantee scheme, suggest that housing market activity is likely to remain buoyant over the next six months."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said Google Trends data indicate that visits to one of the three main property websites were 26% above their average for the time of the year in the first three weeks of March, up from 15% in February.

"Nonetheless, we think that year-over-year growth in house prices will cool to about 2% by the end of this year, once the threshold for stamp duty eventually has returned to £125K at the end of September, following a three-month period at £250K.

"The recent rise in risk-free interest rates suggests that mortgage rates will remain at recent elevated levels, even though the improving labour market outlook should enable mortgage spreads to decline. In addition, vaccination should eventually mean that people return to pre-Covid patterns of expenditure, leaving less income left over for housing."

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