House prices down 1% and may drop further, warns lenderMake Text Bigger
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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