UK property price improvements continue

Property prices in the UK continued to post improvements throughout May, but recovery could begin to slow later this month, the Nationwide has warned.

According to the building society, concerns over a proposed increase to capital gains tax could but a dampener on the recovering market, with fears that many buy-to-let investors could flood the market with property to avoid the rate increase.

"It is difficult to know with any precision how many people would bring forward a decision to sell," Martin Gahbauer, the Nationwide's chief economist, said.

"The incentive to try to beat the higher tax rate is most pressing for those who have owned their properties for a relatively long period of time and therefore have relatively large unrealised gains," he explained.

However, last month, homeowners enjoyed a 0.5 per cent growth in property values, with prices up 12.2 per cent from the lows experienced in February 2009.

LandlordZone.co.uk claims that rental demand is likely to remain strong in the majority of areas in the UK this year.

The website cites difficulties obtaining mortgages and uncertainty surrounding jobs as reasons for the continued popularity of the sector.

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