U.K. house prices fell in April after a surge of rental investors rushing to beat a tax change bolstered the market earlier in the year, according to Halifax.
Average values dropped 0.8 percent from March, the mortgage lender said in a statement on Monday. That reduced the annual gain to 7.8 percent from about 11 percent. On a less-volatile quarterly basis, prices rose 1.5 percent from the previous three months.
Prices were boosted this year as a shortage of homes for sale was exacerbated by buy-to-let landlords trying to beat a stamp duty increase on second properties. While a cooling economy and uncertainty surrounding the U.K.’s European Union referendum in June may damp the market, the fundamental forces of falling unemployment and low borrowing costs will continue to support prices once short-term factors have faded, according to Halifax.
“Current market conditions remain very tight as the severe imbalance between supply and demand persists,” said Martin Ellis, an economist at Halifax. “This situation, combined with low interest rates and rising employment and real earnings, should continue to push house prices up over the coming months.”
Ellis also said that “weakening sentiment” toward house-price prospects and a dip in consumer confidence mean that annual gains may ease.