House prices are down 1% over the past 12 months and may fall further as the first time buyer stamp duty holiday ends, warns the Nationwide.
Prices are at their lowest for six months, dropping an average £137 a month for the past 12 months, research by the lender for March disclosed.
The average UK home is valued at £163,327.
The Nationwide’s chief economist Robert Gardner said: “A slowdown was to be expected, given the imminent expiry of the stamp duty holiday, which had provided a temporary boost to house prices in early 2012 as buyers brought forward purchases that would otherwise have taken place later in the year.
“This dampening effect on housing market activity and prices may fade over the course of the summer, especially if the wider economic outlook begins to improve and other policy measures, such as the government’s NewBuy scheme are successful in supporting buyer demand.
“Our view is the challenging economic backdrop is likely to continue to act as a drag, with house prices moving sideways or modestly lower over the next year.”
The stamp duty tax break has exempted homes valued from £125,000 to £250,000 from 1% stamp duty for first time buyers since March 2011.
“Around 180,000 first time buyers benefited but assessing how the policy affected the housing market is difficult as...
no figures suggest how many sales would have taken place anyway,” said Gardner.
“We estimate that around 100,000 first time buyers will pay stamp duty on properties valued at up to £250,000 in the next year, adding an average of around £1,800 to purchase costs compared to last year.”
The worry for many sellers is that £1,800 may kill the market when added to the average 25% deposit of £40,000 a first time buyer already has to find when applying for a mortgage.©LandlordZONE® – legal content applies primarily to England and is not a definitive statement of the law; always seek professional advice. Legislation changes, so check dates on these articles. If you have questions go to the LandlordZONE® Forums