Home sales plummeted by 45.2% in April 2016 compared to March after the 3% stamp duty surcharge came into force, the government’s new UK House Price Index (a merger of the Land Registry and ONS HPIs) shows.
From February to April the number of sales was still 8.3% higher than between November and January.
The data showed that UK house prices rose by 8.2% in the year to April, with property values reaching £209,054 after a 0.6% monthly rise.
Jeremy Leaf, a former RICS chairman and north London estate agent, said: “Although the annual price growth is not unexpected in view of other surveys, it shows that the property market has suffered a correction as it got caught between an upsurge in activity prior to the stamp duty change and uncertainty created by the EU Referendum.
“The two main drawbacks of this index are its historic nature and its immaturity. There are no robust statistics with which to make a comparison so it is difficult to compare like-for-like. However, going forward the figures will be particularly interesting after the EU vote one way or another, and as the index starts to mature.”
Andrew McPhillips, chief economist at Yorkshire Building Society, expected price rises to slow from the 8.2% recorded in April.
He said: “We expect prices to rise in the remainder of the year, but at a less pronounced level than previous years due to macroeconomic weakness.
“Given that house price inflation has outpaced wage-growth for a number of years, affordability constraints are likely to dampen market activity in the near future. In addition to this, a combination of EU referendum uncertainty and turmoil in global markets could weigh on price growth at least in the short-term.
“House prices have increased substantially in recent years, especially in the South, and a slowdown in prices would go some way towards correcting the house price boom. That said, in the long-term house prices are likely to carry on growing beyond wage-growth as a consequence of demand outstripping supply. This will continue to push people out of the market unless more properties are built for people to buy.”
In England prices rose by 9.1% after a 0.7% rise from March.
Prices saw the sharpest annual rise in London (14.5%) and the greatest monthly rise in the North West (2.3%).
The North East saw the lowest annual price growth (0.1%) while the South West saw the greatest monthly price fall (-2.8%).
David Brown, chief executive of Marsh & Parsons, said: “The rate of house price growth in the capital has been overshadowed at various junctures over the past year by strong showings from the East of England and the South East, but London is top dog once again.
“A truly world-class destination like London may not always be at full throttle, but it never loses its lustre.”