House prices in July fall despite tax breaks for buyers

House prices in July fall despite tax breaks for buyers

An apartment block is built behind a row of traditional properties in central London.

LONDON - Price of homes in July declined after falling in June as demand for bigger homes on the back of the pandemic lockdown helped soften the impact of reduced tax breaks for buyers, mortgage lender Halifax said on Friday.

House prices were 0.4% higher than in June when they fell monthly by 0.6%, Halifax said.

In annual terms, prices were 7.6% higher than in July 2020, the slowest increase since March.

Russell Galley, Halifax managing director, said that he expected the market to settle after the recent buying surge which was driven by the tax incentive but a shortage of home in the market was likely to help prices.

Under the incentive scheme, Stamp Duty tax was exempt from the first 500,000 pounds of any property purchase in England or Northern Ireland until June 30. A 2.50,000 pound tax-free allowance is now running until the end of September.

Galley said the recovery in the economy from its coronavirus shock and higher confidence among consumers suggested annual price growth would remain effectively in positive territory after the end of the year, while slowing.

Rival mortgage lender Nationwide said last week its measure of property prices showed a monthly drop of 0.5% in July, the first reduction since March. That slowed the annual growth to 10.5% from June's leap of 13.4%, the steepest in 17 years.