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UK residential property values have seen the first monthly rise since three months ago.

A new report by mortgage lender Nationwide found that UK property valuations showed a modest increase of 0.3% in May compared with previous months, after April’s figures recorded a 0.3% fall.

The low volume of residential properties up for sale is sustaining the price increase, according to the mortgage lender.

UK property valuations are still 0.7% lower than they were this time in 2011, meaning the average asking price is £166,022.

This reduction is smaller than the 0.9% year-on-year drop recorded in March and April, said the Nationwide.

Robert Gardner, chief economist at Nationwide said “Demand for homes remains subdued on the back of weak labour market conditions, but the lack of homes coming on the market is providing support for prices. This is in part a reflection of the low rate of building in recent years which has failed to keep pace with household formation”.

The mortgage lender’s findings also showed that consumer demand for residential property outweighs the supply due to rising rent costs as a result of people staying in rented accommodation in the PRS because they are unable to raise the deposit or secure a mortgage to purchase a home of their own.

The Halifax have revealed that the end of the stamp duty holiday and a rise in first-time buyers rushing to jump on the property ladder, helped push up UK residential property values by 2.2% in March.

The lender said property values averaged £163,803 in March 2012

The average residential property value was 2.2% higher than in February but still 0.1% lower on a quarter-by-quarter basis and 0.6% down on 2011 property values.

Halifax housing economist, Martin Ellis, said: “Efforts by first-time buyers to beat the expiry of the stamp duty holiday at the end of March have probably increased sales in recent months and may have helped to support prices.”

Research by the bank revealed that around 4 in 10 first-time buyers benefited from the stamp duty concession before the threshold for stamp duty fell from £250,000 to £125,000 at the end of March 2012.

The HMRC have confirmed the number of residential property sales in January and February was 14% higher than in the same period of 2011, its highest level since 2009.

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