Double dip real danger

The average house prices fell for the third month in a row during May, according to the Acadametrics index, the only measure which uses actual prices for every property transacted in England and Wales rather than valuation estimates or asking prices.

The average price in May was £220,352, a fall of 0.2% on the month before. The figures suggest that the housing market may be experiencing a "double dip", with the post-credit crunch recovery – which saw prices start to rise again in 2009 – now over.

Acadametrics reported declines in May across the country, ranging from a 2% fall in the east Midlands to a 0.1% fall in Greater London.

Dr Peter Williams, chairman of Acadametrics, said:

"The housing market stalled in May, although it remains unclear as to whether this is the start of a sustained decline. The question now is will that decline continue through to the end of the year and beyond?

"There is much to suggest that it will, although in reality there is a spectrum of views from analysts ranging from a price fall of 7% to a 3% rise over the next six months. Clearly, the emergency budget on 22 June will offer some clarity, not least on CGT but also on other tax rises and expenditure cuts."

The scrapping of home information packs (Hips) and fears over a steep rise in capital gains tax (CGT) on second homes and buy-to-let properties propelled more homes on to the market, driving down prices for the third successive month.

Areas where investors dominate, such are holiday letting areas and in city centres where a high proportion of property is onwned by buy-to-let investors may be particular vulnerable to price falls as investors sell prior to any changes in Capital Gains Tax rates.

Property Hawk has warned investors not to panic and to take a long-term view on their property investments.