UK house price drop worsens as London gains

 
Ben Southwood
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THE DROP in house prices in the UK accelerated in June, as weakness from the Eurozone and the expiry of the stamp duty holiday took their toll, Nationwide said yesterday.

Prices were down 0.6 per cent on the month, as part of a 1.5 per cent slide since June 2011 – the biggest year-on-year fall in almost three years.

Values have been sliding since a spike in March, when first-time buyers rushed to complete purchases before stamp duty kicked back in.

“The slightly weaker trend we’ve observed since March is unsurprising, given the difficult economic backdrop, with the UK economy dipping back into recession…and few signs of a near-term rebound,” said Robert Garden, chief economist for Nationwide.

“The outlook for house prices remains highly uncertain. Economic conditions are expected to remain challenging over the next twelve months.”

Yet again the <a href="/house-prices">London housing market</a> contrasted with the patchy picture for the UK throughout the second quarter, when nine out of 13 regions saw prices fall, separate Nationwide figures showed. Prices in the capital went up one per cent quarter on quarter, adding to a 1.2 per cent rise on the year.

And first-time buyers returned in May after a poor April prompted by the end of the stamp duty holiday, rising 28.3 per cent on the month and 17.3 per cent on the year.

The asking prices on first-time homes were up 4.3 per cent compared to April, but down 1.9 per cent on the year, according to research published yesterday by LSL Property Services.

David Newnes, director of LSL, yesterday put the rebound down to wealthier buyers. “After April’s drop-off…buyers with strong finances… were able to provide large deposits, and borrow at lower LTVs [loan to value ratios],” he said.