According to property website Rightmove, May’s poor performance was due to a combination of the end of the Stamp Duty holiday for first-time buyers, which finished in April, compounded by wet weather, worries about the eurozone and increases in mortgage interest rates.
Against a backdrop of economic instability, the index revealed that twice as many people were looking to downsize than move to a bigger house.
It was the first time in 10 years that Rightmove’s house price index did not improve in May.
Rightmove director Miles Shipside said that the market seemed to have “paused for breath.”
He said: “With overall market volumes already in the doldrums, we need a fair and consistent wind of mortgage lending to prompt a speedier housing market recovery.”
The only part of the country to buck the trend was London, where trading up to a bigger home was the main reason cited for buying a property, and average prices rose 1% in May and 9% over 12 months.
The Stamp Duty holiday, which applied on homes costing less than £250,000, did not impact most boroughs in the capital – only Newham, Bexley and Barking and Dagenham have average asking prices of under a quarter of a million pounds.
Lack of supply of property in the capital continues to underpin prices, as does an influx of cash buyers from the eurozone looking for a safe haven for their money.
