House price growth eases in UK

According to the latest report from Halifax, house price growth have slowed in the United Kingdom heading into the referendum.

• Prices in the three months to June were 8.4 percent higher than in the same three months of 2015. This is slower than a previous rate of 9.2 percent.  Current pace is lowest since July 2015. The average price that was recorded was £216,823
• House prices in the last three months (April-June) were 1.2 percent higher than in the preceding three months, slower than 1.5 percent recorded in May. Monthly growth has been 1.3 percent.

According to Martin Ellis, the Halifax housing economist,

“There is evidence that the underlying pace of house growth may be easing……..house prices continue to increase, albeit at a slower rate, but this precedes the EU referendum result, therefore it is far too early to determine any impact since.”

According to the report, a recent increase in stamp duty tax rates for buy to let and second home is having a substantial impact in the market.

We expect house prices to be hit very adversely which will be evident in next few months. The initial hit would come from house investors who are likely to withdraw money from the property investment trusts. This week, six Real Estate Investment Trusts (REITs) have halted withdrawal of investors’ money due to liquidity mismatch. In the coming weeks and months, we should see the wave of selling hitting the property market.