Home sales tumble following return of stamp duty

Richard Sexton, director of e.surv comments:

“The sharp fall in transactions in April shows the huge impetus the end of the stamp duty holiday injected into the market. The 32% rise we saw in March has now been replaced by the corresponding fall and the pressure is now on for the government to show schemes like New Buy will be able to make up for the return of stamp duty and drive the market forward.

“Property prices have shown remarkable stability over the last 12 months. Even though the UK entered recession in the first quarter, prices have increased by 0.4% since December and by 1.4% since June. On an annual basis, we’re likely to see price growth return next month as the spike in prices created by the rush to beat last year’s stamp duty hike for properties over £1m falls out of the figures. The market has been supported by strong underlying demand from buyers, who, despite having to clear relatively large hurdles to access mortgage finance, are still anxious to take a step onto the property ladder. Strong underlying demand from buyers pushed transactions in Q1 2012 20% higher than in the same period last year.

“The East Midlands joined London as the only other region to see a monthly increase in prices in April. A large volume of prime property in London is changing hands at very high prices and this is bumping up prices across the capital. This is in marked contrast to the North of England, where prices have fallen 4% on the year as public sector cuts and static economic growth have caused disproportionate economic strain on the region. Nonetheless, the North saw prices rise 1.1% in April, which is likely to have been driven by the stamp duty rush. This means the increase is unlikely to be sustained in the short-term, but it shows even where prices have fallen, there remains a strong appetite for property across the country.”

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