Home prices in the UK increased the least in five months in June, as the supply of residential units for sale increased and the plan for a budget cut curbed demand, according to property researcher Hometrack Ltd.
The average price of homes in England and Wales rose 0.1 percent to £158,900 (S$332,309) from the previous month, the slowest pace of growth since January, said Hometrack Ltd.
The number of new buyers registering with property agents grew 0.1 percent and dropped in six out of ten regions led by a a 0.9-percent decline in London.
Last week, George Osborne, Chancellor of the Exchequer, announced the biggest spending cuts in a decade and that higher taxes would be implemented to reduce the budget deficit of the country.
The Nationwide Building Society revealed that consumer confidence dropped the most since July 2008 last month while home-price inflation has also been restrained by a growing number of properties for sale.
“Over the last four months the supply of housing for sale has grown three times faster than demand,” said Mr. Richard Donnell, director of research at Hometrack Ltd. “We expect demand for housing to slow further as seasonal factors come into play and households consider the implications of the budget on their finances and on the economy.”
Hometrack said that prices grew 2.1 percent in June from the previous year. Properties being listed for sale increased 2.9 percent from May and is up 15 percent in the past four months.
“We expect market conditions to remain subdued with prices likely to track sideways at best, but with the distinct possibility of small month-on-month falls,” said Mr. Donnell.
The company warned that higher interest rates could pose “the greatest potential threat” to the housing industry and could cause a “material change” in market conditions.
Mr. Andrew Sentence, a policy maker from Bank of England, voted for an increase in interest-rate during the central bank’s meeting last June 10. This marked the first push for an increase within the policy committee for nearly two years. Meanwhile, the seven other members decided to put the benchmark rate on hold at 0.5 percent.