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More Problems for UK Housing Market?

Despite the slight increase during June for the UK housing market, Halifax claim that more problems could be just around the corner.

Halifax, which is now part of Lloyds Banking Group, said that the increase in taxes, inflation and low pay rises were all contributing to the reduced demand from buyers.

Halifax did say, however, that the housing market was maintaining stability thanks to low interest rates.

An increase of 1.2% on the average home value in June compared with May was a positive sign but prices were still down by 3.5% on the same period a year earlier.

The annual change is based on average prices during the three months to the end of June and is then compared with the same three month period of the previous year.

The three month period to the end of June saw a drop of 0.5% on the previous three months which was the smallest quarterly drop since the second quarter of 2010.

Martin Ellis, Halifax Housing Economist said:

“Low interest rates, an increase in the number of people in employment and some tightening in market conditions earlier in the year are likely to have been the main factors behind the recent improvement in price trends.”

“A slowly improving economy and sustained low interest rates should help to support broad stability in the market over the coming months.”

“The market is, however, likely to continue to face significant headwinds which are expected to constrain housing demand.”

Halifax went on to say that the average home cost was now £163,049.

The data that was used for Halifax’s analysis was broadly similar to Nationwide Building Society who themselves had said that the property market was “moving sideways” only last week.

The Land Registry, which produces relatively comprehensive figures that lag behind other surveys, said that prices in England and Wales dropped by 0.4% in May, to push them 2.2% lower than a year earlier.

However, it said that prices in London were bucking the trend