Second wind for house prices?

The latest Halifax house price index shows price increase continuing to moderate last month, though a leading economic consultancy suggested the Chancellor's stamp duty reforms could give the market a "second wind".

Halifax reported that house prices rose by a relatively modest 0.4%, reversing a slight drop the previous month.

The annual rate of increase declined for the fourth consecutive month, to 8.2%.

However, Matthew Pointon, housing specialist at Capital Economics commented that yesterday's cut in stamp duty announced by the Chancellor would give house prices a boost over the next few months.

Although there would be no repeat of the surge in values seen over the past 18 months, he suggested prices would get a second wind.

He predicted that the direct impact would amount to less than 1 per cent, as buyers used the leeway provided by the typical gain of £4,500 to offer more.

But the indirect impact was likely to be larger as the reforms lifted confidence and cut costs.

Halifax expects further moderation in prices but issued a statement on the stamp duty changes saying, "The average homeowner will be financially better off under the new structure and the changes should encourage more movement in the housing market as transactional costs will be reduced for many".