The latest LSL/Acadametrics House Price Index also reveals that the double bank holiday weekend pushes property transactions down 6% to their second lowest April level since 1995. Top value transactions pushed up prices in London and the South East, but all other regions saw prices fall in April.
Richard Sexton, business development director of e.surv, comments:
“The onset of increased stamp duty for the highest priced homes meant that in the first 5 days of April there were as many transactions involving properties in this price bracket as there would normally be in the entire month.
"Rising prices at the top of the market have held up property prices above the level the current market environment would have had us expect.
"A flurry of primarily cash-purchase activity in this part of the market brought about a rise in the average price nationally, despite the fact that non-cash purchase prices, reflecting the majority of transactions for less valuable properties, are likely to have fallen in April.
"It’s telling that prices have declined in every region except London and the South East, where there is the highest proportion of £1 million plus properties.
“For most of the property market, April was a relatively tough month as the additional bank holiday reduced the number of transactions. Because so many people went away for the Easter and Royal wedding break, completions dropped by 6% - fully 8% below what we would normally expect at this time of year.
"The market remains hampered by tight mortgage lending, which has led sellers to batten down the hatches and wait for prices to rise, and has prevented buyers from entering the market without large cash deposits.
"This looks set to remain the case as the prospect of a rise in unemployment will create growing uncertainty as the year goes on, which will inevitably force lenders to stick to their cautious lending criteria.”
Dr Peter Williams, housing market specialist and Chairman of Acadametrics, comments:
“The average price of a home in England & Wales rose by 0.3% in April to £223,352, bringing the annual growth rate from 0.3% in March to 0.9% in April, and possibly suggesting the start of a slow recovery.
"However, as we have indicated previously, a consensus view of the market would suggest little change over the forthcoming year. Hence, we must wait to see if this trend is sustained.
"Although an article on real house prices in the UK in the latest issue of the National Institute Quarterly Review suggests that there will be a very slow recovery of nominal prices over the next five years, it says that, in real terms - i.e. taking account of inflation - there will be a 10% fall by 2016.
"Much turns on what assumptions are made about inflation but this does indicate just how exposed the housing market is at present.
“Returning to what has happened in April, it is clear that the main driver in the increase in this month’s average price was the rush by more affluent buyers to avoid the introduction on 6th April 2011 of the higher stamp duty on dwellings costing £1 million or more.
"Although stories in the press regarding the sales of high priced properties in the last few hours of 5th April seemed somewhat apocryphal, the April data emerging from the Land Registry largely supports the reports. At the end of April, the Land Registry had recorded the purchase, between 1st April and 5th April 2011, of 491 properties with values in excess of £1,000,001.
"Thus, in the first five days of April, which included a weekend, the number of properties sold in excess of £1 million had already topped the number normally observed for the whole of the month, and we anticipate that yet more such sales are due to be recorded.
"In more detail: in the City of Westminster 3 detached properties were sold for an average £6.9 million; in Camden 13 semi-detached properties were sold for an average £3.1 million; in Kensington & Chelsea 43 terraced properties were sold for an average £3.1 million.
"Although most of the high-priced sales in April took place in London, this was not exclusively the case. For example, 2 flats in Poole were sold, each at a price in excess of £2 million and 2 semi-detached properties were sold in Northumberland, both valued at more than £1 million.
“Clearly such transactions lie outside of the mainstream housing market. Our Regional Chart, Figure 4, shows that on an annual basis, house prices are falling in all regions of England and Wales, except for London and the South East. In the short term, there is little to suggest that this situation will reverse.
"Indeed, given the generally falling market, plus the removal of previously positive months from the LSL Acad HPI calculations, we may see this negative trend in annual house price change strengthening in the months to come.
“The growth in recent months of cash based sales has been striking. This growth reflects both the greater relative activity in higher priced markets (where cash sales have historically been important) than in the market as a whole, and the restricted supply of mortgages.
"The LSL Acad HPI covers both mortgaged and cash purchases and is, hence, less vulnerable than are mortgage-based indices to changes in the lending market. The CML estimated that approximately 80% of January sales in Central London were for cash.
"Given that London is, thus far, the region experiencing the highest 2011 growth in house prices, it is to be expected that the LSL Acad HPI is likely to record growth, not shown in the lender indices, given that the Land Registry constituent data, on which the LSL Aca
