Richard Sexton director of e.surv comments:
“The looming stamp duty holiday deadline has injected real urgency into the first-time buyer market, which has contributed to transactions increasing by 10% more than the normal seasonal February rise. But the stamp duty rush has not been the sole cause of the improvement in the housing market. Despite the threat posed by the eurozone crisis, lenders have been showing increasing confidence, stepping up their lending to the lower end of the market.
“The annual decline in prices may have accelerated to 1.8% in February, but the comparison highlights the spike in demand and prices in the prime property in the run-up to last April as buyers rushed to beat a new 5% tax band for £1m properties – rather than a worsening outlook for the current housing market. In fact, against a wider backdrop of more positive national economic news and falling inflation - easing the strain on buyers’ finances - buyer sentiment has shown welcome signs of picking-up.
“The passing of the first-time buyer stamp duty tax deadline will certainly put the recent progress to the test in the short-term, but historically affordable mortgage rates available for new buyers – not to mention the introduction of the NewBuy mortgage scheme – should help cushion the financial blow. In the longer-term, any concerted rise in transactions will be tied to the fallout of the financial crisis abroad and subsequently banks’ and building societies’ abilities to support the mortgage market’s growth.
“However, it is clear that regional disparities are growing and London remains in a league of its own. Without London the national picture would look far gloomier. In fact, Wales is the only other region that has seen prices rise in the past year. Despite steadily improving mortgage finance provision, cash buyers are still underpinning the market’s strength, with high value property in the capital seen as insulated against the adverse economic conditions in Europe.”
