David Brown, commercial director of LSL Property Services, comments:
“After the 10% rise in transactions in February, the rush to beat stamp duty injected even more vigour into the market in March.
"The bulk of the boost in activity came from first time buyers rushing to complete their purchases before the end of the stamp duty holiday. But the chancellor’s surprise announcement of the 7% super-rate of stamp duty for properties worth more than £2 million meant many high-value transactions were also rushed through on budget day.
"It’s understandable given the average first-time buyer purchasing a property for £250,000 now has to find an additional £2,500 to add to their deposit, from an average income of £33,800 p.a. It would take five weeks after tax for a buyer to earn, and far longer for them to save, this much.
“March’s modest price increase indicates that, although transaction numbers rose rapidly last month, the bulk of the activity was for properties below the £250,000 threshold. With the average house price sitting at £221,543, high levels of activity below £250,000 did not significantly swing the overall average price.
“On an annual basis, the relatively large decrease in prices is likely to be reversed in the coming months as the artificial price spike seen in the early part of last year – which was driven by the rush to avoid the 5% band for properties over £1 million – drops out of the figures.
“It’s also important to remember that the relatively stable national picture of house prices masks a far more volatile picture at a regional level. Although price growth has slowed in London over the last few months, the capital is currently the only region in which prices are rising.
"The price rises enjoyed by London homeowners mean the national figures do not reflect what have, in some areas, been relatively steep price falls, with the north of England a notable example, showing annual price falls of 6.1%.”
