2012.05.04 17:35:03 UK April House Prices Slump As Tax Break Effect Fades

LONDON -- U.K. house prices slumped in April, more than wiping out the gains reported in March as the end of the government's stamp duty tax break likely led to the steep downturn in prices and activity, U.K. lender Halifax said Friday. However, the lender is sticking to its original outlook for the year ahead and expects house prices to be little changed by the end of the year. House prices fell 2.4% on the month in April and were 0.5% lower when compared with a year earlier. That compares with a 2.2% monthly increase and a 0.6% annual fall in March, and was weaker than expected. A survey of economists by Dow Jones Newswires had forecast that house prices would be unchanged on the month and 1.1% higher than a year earlier. "The ending of the stamp duty holiday for first-time buyers in late March appears to have boosted home sales early this year as buyers strove to beat the deadline, and has probably contributed to the volatility in house prices in the last few months," said Martin Ellis, Halifax housing economist. "We continue to expect little overall movement in prices as the U.K. economic situation remains challenging," he said. The U.K. housing market began the year on a firmer footing, boosted by interest from first-time buyers hoping to take advantage of the government's stamp duty sales tax break. That ended on March 24, however, and sales activity--along with sellers ability to hold out for a higher price--have fallen. That more upbeat start to the year saw the three monthly measure improve as prices rose 0.3% in the three months to April compared with the three months to January and up from a 0.1% decline in the three months to March. However, after a disappointing return to recession in the first quarter of the year after the U.K. posted a second straight period of gross domestic product contraction, house prices and activity are likely to remain around current levels for some time. "Despite the slight improvement in the underlying trend in recent months, house prices continue to lack real direction with the current U.K. average price little different to where it was at the end of 2011," Ellis said. Website: www.halifax.co.uk -Ilona Billington, Dow Jones Newswires, +44 20 7842 9452; ilona.billington@dowjones.com (END) Dow Jones Newswires May 04, 2012 05:05 ET (09:05 GMT)