House prices down 1% and may drop further, warns lender

House prices down 1% and may drop further, warns lender

15:37 PM, 29th March 2012, About 12 years ago 6

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Homeowners face more misery as house prices dropped back for the first time in six months as the stamp duty holiday for first time buyers ends.

The fall signals the start of an expected slow decline in house prices as first time buyers race to complete a purchase rather than holding off until later in the year.

The figures, from the Nationwide Building Society, one of the country’s largest mortgage lenders, reveal prices fell by 1% over the past 12 months, with an average home now costing £163,327.

The average home value is shedding £137 per month.

The building society’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.”

Market commentators are unsure how the end of the stamp duty holiday will affect the market.

The popular tax break exempted homes valued from £125,000 to £250,000 from 1% stamp duty for first time buyers.

“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.”

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18:46 PM, 29th March 2012, About 12 years ago

I actually think house prices will rise next month but after that will fall for the rest of 2012.  This is good news for first time buyers as house prices are still very over valued.

Mark Alexander - Founder of Property118

19:40 PM, 29th March 2012, About 12 years ago

The reality of course is that all of these surveys are poppycock in the current climate as there are too few transactions due to market stagnation, i.e. not enough people buying or selling. Any market relies on two things, willing buyers and willing sellers. We are in every investors worst nightmare, there are not enough of either.

10:52 AM, 30th March 2012, About 12 years ago

I don't think they can be classed as poppycock if they continue to fall in the monthly, 3 monthly and annual figures.  Mortgage rates are rising, lending is tightening and the Euro crisis rumbles on with the focus on Spain at the moment.

The stamp duty changes will effect the London market downwards which has in the past few years been masking the size of the national price falls.

Property prices are still very overvalued and the pillars holding them up are slowly falling away.  These lower house prices will benefit first time buyers and future generations.  The price falls may not be so good for property speculators.

17:01 PM, 30th March 2012, About 12 years ago

Mark don't you think no matter how willing either party might be; if the lenders out there are not prepared to increase the LTV; allow IO only mortgages without repayment vehicles in place and require large depostis, nobody will be buying. no matter how 'willing' they are.

Mark Alexander - Founder of Property118

17:51 PM, 30th March 2012, About 12 years ago

The issues you have raised are contributory factors but not the only ones causing market stagnation.

21:36 PM, 30th March 2012, About 12 years ago

It would be interesting to know how many of the mortgages granted actually came from people who did not have any equity in their or another property or were not just remortgaging.
Strip out those people from the mortgage figures to leave a better reflection as to the true mortgage market; and I reckon it's true dire state.

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