U.K. house prices rose only 0.2% in May as overall housing market activity remained subdued in the backdrop of the uncertain political scene earlier in the month following the general election, a survey showed.
While monthly growth in house prices stagnated at 0.2% in May, annual increase was 2%, data released by property data provider Hometrack showed Monday. In April, house price annual inflation was around 1.8%.
The sales volume grew 2% in May, which was considerably down from the average rise in sales agreed of 9.6% per month over the prior three months. Mainly, London and southern England reported rise in house prices.
At the same time, new buyers registering with real-estate agents moved up only 0.5% in May versus an average 4.2% growth between February and April. The supply of homes for sale climbed 1.8% in May. According to Richard Donnell, Hometrack's director of research, uncertainty generated by the election had a clear impact on housing market activity with fewer buyers coming to the market, a marked slowdown in sales agreed and a drop off in the number of new homes for sale.
Low turnover looks set to remain the dominant feature of the market, Donnell noted. This trend is expected to sustain the scarcity of housing for sale and support prices. Hometrack said the possibility of higher interest rates and a proposed rise in capital gain tax poses the "greatest threat" to the market.
The survey conducted by the property website Rightmove had shown earlier that a slowdown in house price annual inflation in England and Wales to 4.3% in May from 6% in April. The group said the number of new sellers coming on to the market surged in the week just before the election, to its highest weekly total since June 2008.
Data from British Bankers' Association showed that the number of loans approved for house purchases totaled 35,729 in April, up from 35,044 in March. In March, mortgage approvals rose to 48,901 from 46,882 in February, a report from the Bank of England showed.
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