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‘Business as usual’ as house price growth slows following March rush

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  • 28/04/2016
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‘Business as usual’ as house price growth slows following March rush
It’s ‘business as usual’ in the property market, according to experts, as a slowdown in house prices has been revealed for April, preceded by a rush to beat Stamp Duty hikes in March.

The monthly house price index from Nationwide found that prices increased by 0.2% between March and April, the slowest increase since November 2015.

The annual average house price increase was found to have slowed to 4.9% in the year to April, compared to a rise of 5.7% in the year to March.

Robert Gardner, Nationwide’s chief economist, said: “This slowdown returns the annual pace of house price growth to the fairly narrow range between 3 and 5% that had been prevailing since the summer of 2015.

“It may be that the surge in house purchase activity resulting from the increase in Stamp Duty on second homes from 1 April provided a temporary boost to prices in March.”

Jonathan Hopper, managing director of buying agents Garrington Property Finders, also said the Stamp Duty deadline would have skewed prices for March.

“Starved of the Stamp Duty stimulus, the property market is returning to business as usual,” he said.

“And on this evidence, business remains brisk. Buyers are out in force, and with strong demand and chronically insufficient supply in many areas, we should expect to see more steady price rises during the summer months.”

He said the slowdown in April is likely to be followed by a more normal rate of growth, rather than an unforeseen slump in the market.

“We’re also getting a better idea of just how skewed the March figure was by the surge in demand from buy-to-let buyers rushing to complete before the Stamp Duty increase for second homebuyers,” said Hopper.

“With buy-to-let mortgages accounting for a quarter of all home loans granted in March, the spike in competition this created drove the rate of price growth to what’s likely to be a high water mark.”

However, he expected London to be hit by a decline in international interest as the Brexit referendum approaches, but said this dip would be offset by a shortage of homes that will keep prices rising, albeit at a slower pace.

Rob   Weaver,   director   of   Investments   at   property  crowdfunding platform Property Partner, said that it was not only landlords that drove the March price rise, but also cash investors.

“Cash investors were also the cause of March’s spike as news of an extra financial burden was only announced in the November Autumn Statement,” said Weaver.

“Where next is more difficult to judge. Despite strong employment, wage growth and cheap borrowing, there are jitters over whether we’re in or out of Europe.

“It’s likely this uncertainty will have a pause effect on prices in the lead up to 23 June, with a fall in property transactions. But what is certain, there are fewer decent properties currently available on the market as buy-to-let landlords have sucked them up pre-April.”

He said the Stamp Duty hike could result in falling revenues for the Treasury in the short term as fewer completions are made.

“The crisis in supply and insatiable demand will again mean a sellers’ market and we will probably see a continuing rise in prices but by how much is anyone’s guess.”

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