In the first quarter of the year there was a surge of home buying and it was thought that the start of the second quarter would experience a decline. The reason being that homes purchased other than those that would be a primary home were to be subjected to a higher tax after 1 April. This pushed those buying secondary homes or landlords to rush to purchase so that they could escape the higher tax payments.

This rush was expected to be followed by a drop, but instead there was a surprising increase recorded in April. It was a slight increase, but was indeed opposite of a decline. Nationwide reported the average house price for the UK increased by 0.2% in April to a value of £202,436. This is a new high with the house price having passed the £200,000 barrier for the first time in March as it was thought this was a direct impact of the rush to buy to escape the tax increase.

It could be that the April increase was influenced by those that failed to beat the tax increase deadline, but continued with their purchase anyway. Therefore, a decline may be reported for May, but a reported decline could also easily be blamed on the upcoming EU referendum which is causing many to wait until clarity in the economy is revealed.

Howard Archer, chief UK economist with IHS Global Insight, said “We expect housing market activity to regain limited momentum in the second half of 2016, on the assumption that a vote to stay in the EU reduces uncertainty and supports a pickup in economic activity.

“A vote to leave the EU would be liable to see a marked hit to UK economic activity over the rest of this year and in 2017 amid heightened uncertainties, which would likely weigh down heavily on the housing market.”