Nationwide: House prices are rising
The annual rate of price inflation remains relatively high at 9%.
Commenting on the figures Martin Gahbauer, Nationwide's Chief Economist, said: The price of a typical UK property rose by a seasonally adjusted 0.7% month-on-month (m/m) in March, largely reversing the 0.8% m/m fall measured in February. The smoother three month on three month rate of inflation edged down further from 1.8% in February to 1.6% in March. At 164,519, the average price of a typical property is 9.0% higher than a year earlier.
The last two months are consistent with a relatively flat profile for house prices, and in line with the recent drops seen in buyer enquiries and house sales. Preliminary figures show that the number of loans taken out for house purchases failed to recover from Januarys large dip suggesting that weakness in house sales at the start of the year may have been due to more than just the snowy weather. With greater than usual political and economic uncertainty ahead of the upcoming general election, potential homebuyers are proceeding cautiously. At the same time, the number of homes for sale has not increased appreciably, meaning that the impact of lower buyer activity on house prices has not been too negative. If this trend continues, we are likely to see relatively few properties changing hands, but with prices fairly stable.
The Budget brought with it the surprise announcement that for the next two years, the nil stamp duty threshold will be raised from 125,000 to 250,000 for first-time buyers. Based on Nationwides sub-index for first-time buyers, this will produce a savings of 1,368 for the average new entrant into the property market. At a national level, the vast majority of first-time buyers should benefit from the holiday, though with the average London house price at 243,163 for first-time purchasers, a significant number of new buyers in the capital will miss out on the savings.
For first-time buyers, this initiative effectively represents a larger and longer version of the stamp duty holiday in place between September 2008 and the end of December 2009 for properties bought for less than 175,000. Looking back on the previous tax holiday, the evidence on its success in boosting transactions is mixed. Intuitively, one might expect a stamp duty holiday to boost total house purchase activity, with a disproportionately greater increase in transactions at the lower-priced end of the housing chain."
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