Market Update - May 2010

The house price index is based on month-on-month (m/m) figures from The Nationwide and Rightmove. Both figures will compare May's price index against the previous month of April. It will also provide an overview of the performance during May in comparison to the same time last year. The Nationwide figures look into house prices against mortgage approvals with Rightmove looking into asking price figures.

The Nationwide house price index reported a rise of 0.5% during May against the previous month with the average house now worth £169,162. Minus the unexpected fall during February this year, May saw the smallest rise in prices since April 2009. However, despite that, 2010 is still a much stronger year than 2009 with year on year figures showing a 9.8% rise in prices against May last year.

According to Rightmove April recorded a 0.7% rise in new sellers' asking price against the previous month with the average asking price of a property now at £237,134. This was also a 4.3% rise against May 2009 where the asking price then was just £227,441.

Rightmove have highlighted that despite an increase in month on month figures, sellers are now starting to reduce their pricing expectations to attract the fewer buyers that are currently in the market.

The Nationwide have seen a lower rise than anticipated for May. However, prices have now gone up 12 of the last 13 months at a consistent level with year on year figures still performing well.

Rightmove recorded a 0.7% increase in new sellers' asking price. Yet with levels of unsold stock of properties rising as potential buyers are finding it more difficult to obtain a mortgage, sellers are starting to reduce asking prices to attract the few buyers in the market.

As we head into the next few months we may see further changes in the market as the government propose to increase capital gains tax (CGT) from 18% to possibly 40% at the end of June. This could destabilise the market with a sudden burst of sales among buy to let landlords and second home owners to avoid the higher rate of tax.