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House prices reach record high caused by Stamp Duty ‘chain reaction’

  • 18/04/2016
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House prices reach record high caused by Stamp Duty ‘chain reaction’
The rush to purchase buy-to-let property ahead of the Stamp Duty surcharge led to a ‘chain reaction’ for house prices, the latest Rightmove index has found, with second-steppers dominating the market.

The average price of a property coming to market from mid-March to 9 April – rose by 1.3% month-on-month to reach a record high of £307,033.

The real estate firm said this month’s rise is driven by “second-stepper and top of the ladder sectors”.

Meanwhile, smaller properties in the first-time buyer and buy-to-let sector, outside central London, experienced a monthly price drop of  1.4% to £185,612.

Miles Shipside, Rightmove director and housing market analyst, explained the springboard for the domino effect on prices in the period.

“The onset of spring is traditionally when the housing market swings into full-on action, and while the early Easter this year could be credited with its very active current state, the housing market actually received a much earlier kick-start at the end of November”, said Shipside.

“Chains need a buyer at the bottom to enable everyone to move, and that was boosted by investors looking to avoid the 3% levy introduced on 1 April.”

Demand began to drop off as the Stamp Duty deadline neared, according to Rightmove, but said it recorded the most monthly visits to its website in March since it was founded.

Shipside said: “While some felt that there would be a stampede of existing landlords selling to other landlords, these figures indicate that many of those who sold during the buy-to-let rush were actually first-time sellers looking to trade up.

“They used the heightened demand from investors competing fiercely with first-time buyers to springboard themselves onto the next rung of the housing ladder.”

He said second-steppers benefited from a combination of price growth, historically cheap interest rates and confidence in a quick sale as purchasers looked to beat the Stamp Duty deadline.

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