Property prices are continuing to soar – and it’s not just because of stamp duty
There's yet more evidence that the government's stamp duty changes forced house prices up in March – but experts are warning that a chronic undersupply of housing will continue to push prices up overall.
UK house prices increased by nine per cent in the year to March 2016, up from 7.6 per cent in the year to February 2016, according to the Office for National Statistics.
House price annual inflation was 10.1 per cent in England – driven largely by London, where prices rose 13 per cent in the year. Prices rose 6.4 per cent in Northern Ireland and 2.1 per cent in Wales. However Scotland is suffering deflation of 6.1 per cent.
Excluding London and the South East, UK house prices increased by 5.9 per cent over the year; on a seasonally adjusted basis, average house prices increased by 2.5 per cent between February and March.
First-time buyers continue to be faced with the biggest jumps in prices – those getting their first foot on the ladder paid 9.7 per cent more this year than those who bought back in March 2015. For existing owners, prices increased by 8.7 per cent for the same period.
The average price of a house in the UK during March was £292,000, although average London house prices are now more than double that amount.
Haart estate agents chief executive Paul Smith said: “Today’s data shows UK house prices in March soared as a result of the sky-high level of competition for properties which peaked in advance of the 1 April stamp duty surcharge deadline.
"Our data shows there were 11 buyers chasing every property to come onto the market in March whilst transactions surged 19 per cent on the month.
“Although we expect to see a level of uncertainty in the housing market over the next month or so, prior to the EU referendum, this will simply be a blip on the horizon as the power of the UK property market will outweigh any short term insecurity. London, in particular, will remain a global safe haven for investment whatever the outcome."
Mark Posniak, managing director at Dragonfly Property Finance, added: “Lending figures for March may resemble a cricket score but the month was clearly skewed by the stamp duty deadline for buy-to-let and second homes.
“We are entering a period of uncertainty for both the property market and the broader economy from which it may take some time to emerge. If there’s one constant in the market at present, it’s the continued lack of supply. This deep structural imbalance should prevent prices from falling materially whether we’re in or out of Europe.”