May 3, 2012 / 6:19 AM / 8 years ago

House prices fall unexpectedly

A woman holds an umbrella as she walks past the window of an estate agents office in Manchester, June 7, 2011. REUTERS/Phil Noble

LONDON (Reuters) - House prices unexpectedly fell in April after the government ended a tax exemption for first-time buyers in late March, data from mortgage lender Nationwide showed on Thursday.

Nationwide said house prices dropped by a seasonally adjusted 0.2 percent last month after a shock 1 percent fall in March, and were 0.9 percent down on a year earlier.

Economists polled by Reuters had expected prices to rise by 0.5 percent on the month and fall by 0.3 percent on the year.

The exemption for first-time buyers from a land transaction tax on any home worth less than 250,000 pounds expired on March 24.

“This provided a temporary boost to house prices in early 2012 as buyers brought forward purchases that would otherwise have taken place later in the year,” said Nationwide chief economist Robert Gardner.

He said that new initiatives like the government’s NewBuy scheme, which allows people to purchase a new home with a 5 to 10 percent deposit, should encourage house purchases in the coming months.

“However, the challenging economic backdrop suggests that a significant acceleration in prices or activity is unlikely in the near term,” he added.

House prices tumbled about 20 percent at the start of the global financial crisis in 2008 and have since been generally flat, with activity sluggish as Britons grapple with muted wage growth and rising unemployment.

Reporting by Michelle Martin; Editing by Mark Heinrich

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