HOUSE prices have dropped again in April with a “soft market” showing declines in four months out of the last five, new figures have revealed.
Figures from the Nationwide building society revealed a 0.2 per cent monthly drop last month followed a steeper 1 per cent fall in the previous month, meaning average UK house prices now stand at £164,134.
Prices remain 0.9 per cent lower than a year ago, a figure unchanged from March, and the market is set to remain “subdued” for the next 12 months as people remain cautious about the economy, the report said.
The findings, released yesterday suggested recent softness – demand being lower – in the market is due to the ending of the stamp duty concession for first-time buyers. This temporary relief ended on 24 March after two years. It meant buyers were free from the 1 per cent tax on houses valued under £250,000.
It said a rush of buyers to complete deals before the concession ended had bunched up sales which would have otherwise taken place later this year.
Around four in ten first-time buyers have benefited from the stamp duty holiday. Robert Gardner, chief economist for Nationwide, said: “Much of the recent softness in housing market activity and house prices is likely to relate to the expiry of the stamp duty holiday. This provided a temporary boost to prices in early 2012 as buyers brought forward purchases that would otherwise have taken place later in the year.”
He suggested the effects would fade in the coming months, but warned the “challenging” economic backdrop means significant price rises were unlikely in the near future.
Although the economy is forecast to pick up in the second half of this year, it will be some time before the “feelgood” factor filters through to squeezed households, the study said.
Borrowers are also facing tougher hurdles to getting a mortgage. Availability is expected to decrease as lenders tighten borrowing criteria, which has already triggered a fall in the proportion of mortgages being approved by lenders.
Neil Harrison, business analyst at the Edinburgh Solicitors’ Property Centre, said sales continued to be healthy north of the Border and that the stamp tax concession had not appeared to have affected sales.
He said: “Stamp-duty relief didn’t really change things prior to or after it ending. In fact sales have been pretty consistent.
“But what it did do was give those looking for a property more disposable cash which could then be become cash reserves or spent on the property.”
Mr Harrison added: “Part of the explanation is that house sellers have been willing to accept a little less for their property which has helped sales rise.”
David Bookbinder, head of policy and public affairs at the Chartered Institute of Housing in Scotland, said many people would be paying higher mortgage rates from this week.
“The worry is any rate hike may push some beyond where they can afford their mortgage.”