First-time buyers swoop to beat stamp duty
House prices increased by 0.2% over the month to March as first-time buyers rushed to complete their purchases before the end of the stamp duty holiday.
The LSL Acadametrics House Price Index for March shows that the average house price was £221,543 which was down 1.3% year on year despite the small monthly increase.
However transactions rose by 32% in March following a 10% rise in February.
Commenting David Brown, commercial director of LSL Property Services, said: "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.
"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%."
Dr Peter Williams, housing market specialist and chairman of Acadametrics, believes one of the notable features of the housing market in March 2012 was the increase in transactions over February 2012 and indeed over March 2009, 2010 and 2011.
"We estimate that transactions in March 2012 exceeded 60,000 (not seasonally adjusted) - a level not seen in the month of March since 2008.
"Monthly transactions during 2011, as a whole, equated to 64% of the long term average.
"March transactions equated to 75% of the long-term average for the month.
"However one of the main reasons for this increase was the rush to buy before the stamp duty land tax holiday for first-time buyers on properties valued between £125,000-£250,000 ceased on 24th March.
"Given that this holiday was saving first time buyers between £1,000-£2,500 in stamp duty, it is no wonder that transactions were higher, especially in the three months prior to the cut-off date."
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