House prices record biggest ‘spring bounce’ in eight years
House prices have recorded their biggest “spring bounce” in eight years, fuelling hopes that the property market will be more robust in 2012 than last year, the Rightmove house price index shows.
The typical property asking price rose to £236,939 in March, a 4.9pc rise over the first three months of this year and the largest first quarter increase since 2004, Rightmove said in the survey published on Monday. London asking prices reached a new high of £455,159, up 7.3pc year-on-year, and the average asking price in Kensington and Chelsea has broken the £2 million barrier for the first time, with typical prices standing at £2,000,120 in the borough.
Strong interest from overseas buyers has helped to boost the London market, while all 10 regions in England and Wales recorded monthly price rises in March.However, the Midlands, Wales and the North West have seen prices dip year-on-year and the West Midlands recorded the biggest annual fall, with asking prices dropping by 2.9pc to £181,925.Miles Shipside, director of Rightmove, said: “The traditionally buoyant spring market has combined with a shortage of supply and brisk turnover of property.
“The result is another new record for average asking prices in the capital this month, representing an increase of nearly £600 a week over the last year and underlining London’s continuing property market strength.” Average asking prices across England and Wales rose by 1.6pc month-on-month in March following a 4.1pc rise in February and they are up 2.2pc on the same period last year. The 1.6pc rise is also the highest figure recorded in the month of March since 2004. But Rightmove cautioned that the recovery remains patchy and transaction levels are still low, meaning the market is “very sensitive” to external influences.
First-time buyers face a “double blow”, with the ending of a two-year stamp duty exemption for this sector of the market this week combined with asking prices for their target market of terraces and flats being around 3% higher than a year ago. Mr Shipside said: “For a first-time buyer it’s already hard enough to raise the necessary deposit and now, as well as potentially losing between £1,250 and £2,500 in stamp duty exemption, asking prices for their property types have increased by over £5,000 in the last year as well…
“The question is: can the Chancellor afford to spring a surprise and extend the stamp duty exemption? “If not, what are the potential costs of leaving the UK re-sale property market without any incentives?” The study said the recent launch of the Government’s NewBuy scheme to help people looking to buy a new-build home may help counteract the removal of the stamp duty concession, but it was of “little consolation” to those looking to buy and sell existing homes.
Rightmove said the withdrawal of the exemption on homes costing between £125,000 and £250,000 came at a time when its own research showed that 52% of first-time buyers intending to buy in the next 12 months have managed to save between £15,000 and £40,000 for a deposit. Mr Shipside said: “It’s a kick in the teeth if you have saved hard, or begged and borrowed a meaty deposit and have just missed out on the bonus of avoiding stamp duty. “There’s the hope that sellers will take a lower offer to compensate, but that pre-supposes they can afford to do so or there is not a cash-rich investor buyer waiting in the wings.”
He said that with potentially fewer active first-time buyers in the market after the exemption ends “there will also be concern for the two out of five sellers currently on the market in this price bracket”.