"The latest figures from Nationwide are quite encouraging in a way because the slowdown in price growth is not as bad a comedown as one might expect"
The index predicts that house purchase activity will fall in the months due to the number of purchasers that brought forward transactions, and that "the recovery thereafter may also be fairly gradual, especially in the BTL sector, where other policy changes, such as the reduction in tax relief for landlords from 2017, are likely to exert an ongoing drag".
However Mark Posniak, Managing Director at Dragonfly Property Finance, said that against "growing talk of the next house price crash... Nationwide's latest index is surprisingly upbeat".
Posniak added: “At 0.2%, house price growth in May was negligible but the broader prognosis given by the Nationwide, specifically that the market could favour sellers, is out of sync with the doom-mongering of various property market commentators."
Robert Gardner, Nationwide's Chief Economist, commented: “In the near term, it’s going to be difficult to gauge the underlying strength of activity in the housing market due to the volatility generated by the stamp duty changes which took effect from 1 April. Indeed, the number of residential property transactions surged to an all-time high in March, some 11% higher than the pre-crisis peak as buyers of second homes sought to avoid the additional tax liabilities.
“While cash purchases accounted for a significant proportion of the increase in activity it is not possible to determine whether or not these were purchased by landlords. Mortgage data suggests that, while buy-to-let purchases were a major driver of the increase, the purchase of second homes also accounted for a substantial proportion. The number of home mover mortgages, which is where second home purchases with a mortgage would show up, increased sharply in March."
Jeremy Leaf, former RICS chairman and north London estate agent, added: "The latest figures from Nationwide are quite encouraging in a way because the slowdown in price growth is not as bad a comedown as one might expect following the rush from landlords and second homebuyers to beat the stamp duty hike.
"The figures are also indicative of a relatively strong underlying market. Other buyers were, and still are, just as active as some of the investors in the period leading up to the change in stamp duty rates. This is reflecting what is happening on the ground where some vendors are reducing prices in order to get properties sold because there is less demand."
