Bucking the recent trend, house prices in the UK fell by 1.2% in June, Britain's largest mortgage lender, HBOS-owned Halifax, has reported.
The news comes as a surprise in the context of a buoyant market in 2006. However, the company suggested that recent increases in energy and tax bills were to blame for last month’s drop.
It is the second time in a matter of days that tax hikes and power company tariff rises have been blamed for a negative financial impact. At the beginning of the week Ernst & Young argued that the two costs were key factors in leaving UK citizens financially worse off than they were five years ago.
However, longer term trends for house prices allow for greater optimism. Property prices increased by 2.6% in the second quarter of the year and by 4.5% over the first half of 2006, Halifax contests.
Sound fundamentals, underpinned by a strengthening economy, high levels of employment and low interest rates, will continue to support housing demand over the second half of 2006, Martin Ellis, Halifax’s chief economist, predicted.