Have George Osborne's changes to house prices had their desired effect? House price growth fell in May, to its lowest since October last year – suggesting things could be about to look up for those struggling to move up the property ladder.
Nationwide's House Price Index showed prices rose 1.3 per cent to £204,368 in the three months to May, down from 1.4 per cent rises in April and March, and a peak of 1.5 per cent in February.
Year-on-year growth was at 4.7 per cent, its lowest since February, while monthly growth – which tends to be more volatile – stuck at 0.2 per cent for the second month in a row.
The dips in growth rates came a month after the government introduced new rules for buy-to-let properties, which mean would-be landlords must pay three per cent more in stamp duty than homeowners.
But the dip could just be the market settling after buyers went into a frenzy in the months between November, when the new rules were announced, and April, when they came into effect.
Nationwide's figures showed a huge rise in the number of transactions between this March (ie. the month before the new rules came into effect) and the year before – with cash transactions nearly doubling from about 35,000 to just over 60,000.
It could also be an effect of fears over Brexit, which some have suggested may be dampening demand (although estate agents seem pretty relaxed).
Robert Gardner, Nationwide's chief economist, suggested activity in the market may have peaked.
“House purchase activity is likely to fall in the months ahead given the number of purchasers that brought forward transactions.
"The recovery thereafter may also be fairly gradual, especially in the buy-to-let sector, where other policy changes, such as the reduction in tax relief for landlords from 2017, are likely to exert an ongoing drag."
Jeremy Duncombe, director of Legal & General Mortgage Club, voiced his concern that price growth only edged down.
“A generation of aspiring homeowners are increasingly finding themselves priced out of the market, with property prices rising over four times faster than wages in some areas of the UK. Even those who already have a foot firmly on the ladder could struggle to take the next step, resulting in thousands of people across the country living in homes that are no longer suited to their needs, or in ‘second choice’ areas.
"Something needs to change. Demand is still dwarfing supply, and this imbalance is the true underlying issue that must be tackled. Real action is needed with the government and the industry working together to deliver tangible results in the short, medium and long term.”