Residential property prices in the UK fell by 0.4% in May, the steepest decline since November 2011, as the European Union referendum continues to have an adverse impact on the housing market.
With more buyers and sellers adopting a wait and see policy until after the EU vote, the average price of a home fell by £1,312 to £293,599 between April and May, according to the latest house price index by estate agents Your Move and Reeds Rains.
May’s dip in property values follows on from a surge in activity earlier in the year, when buy-to-let landlords and second homebuyers rushed to buy property ahead of the government's new stamp duty surcharge which was introduced on 1 April.
“That tax hike and the government’s anti-landlord policies are weighing down the market, but the main factor is short-term confidence ahead of the 23rd June referendum,” said Adrian Gill, director of Your Move and Reeds Rains.
Despite the month-on-month fall, house prices in May remained 6.8% higher compared to the same month last year, although year-on-year growth has slowed from +7.7% in April and +8% in March.
“With the Chancellor predicting that a Brexit from the EU would reduce property values by at least 10%, many buyers are holding off until after the uncertainly surrounding the referendum has been resolved,” added Gill.
In London, the average price paid for a property fell below the national average, down £1,769, or 0.3% month-on-month to just below £600,000.
However, some parts of the country did buck the falling prices trend, led by gains in Slough, with the average price of a home in Slough now £315,704 - 23%, or £59,692, higher year-on-year.
The Your Move and Reeds Rains report also found that housing transactions during May almost halved compared to March, when buyers brought their house purchases forward in order to beat the buy-to-let stamp duty rise.
Your Move and Reeds Rains said that the March sales figure stood at 106,750, which was significantly higher than the 51,750 transactions recorded in May – the lowest level of sales for the month of May since records began in 1995.