House Prices Decline as Stamp Duty Holiday Reached Expiration
House prices declined in March by 1 per cent according to data recently released by Nationwide building society. First time buyers had returned to the housing market to take advantage of the stamp duty holiday that ended on March 24. By purchasing a property up to £250,000 a first time buyer could save 1 per cent or up to £2,500 if they did so before the stamp duty holiday expired on March 24.
Despite the growth in demand from first time buyers house prices failed to rally. The 1 per cent decline in March was the largest decline in two years. This means that demand from first time buyers occurred way ahead of time of the expiration of the stamp duty holiday. First time buyers made offers on homes in time to complete their purchase before the expiration of the savings offer occurred. It is hoped the NewBuy scheme will assist more first time buyers in getting onto the property ladder as it helps them get into new build homes at a lower deposit level.
Robert Gardner, Nationwide's chief economist, said, “This dampening effect on housing market activity and prices may fade over the course of the summer, especially if the wider economic outlook begins to improve and other policy measures, such as the government's NewBuy scheme, are successful in supporting buyer demand.
"However, in our view the challenging economic backdrop is likely to continue to act as a drag, with house prices moving sideways or modestly lower over the next 12 months."