Londoners feeling the pinch in the wake of last month’s record house price increases could have reason to be cautiously optimistic according to leading fixed fee estate agency, eMoov.co.uk.
Founder and CEO of eMoov.co.uk, Russell Quirk said,
“The introduction of the 3% stamp duty tax increase has been catastrophic for residents looking to get on the property ladder by sending house prices sky high. The price increase last month was the biggest leap on record, meaning the housing shortage is worse than ever with millions of residents simply priced out of the market.
“We have certainly seen a feeling of despondency descending in London amongst house hunters and who can blame them? Not many families can keep pace when the average cost of a new build home shoots up by a staggering £46,000 in just four weeks.”
Figures from the Office of National Statistics show that prices paid by first-time buyers in the city were 9.7% higher in March 2016 than March 2015, pouring further misery on Londoners trying to escape the rental cycle.
The annual house price increase was also higher in London than in any other region – up 13% compared with last year. There is a glimmer of hope though with eMoov experts saying that the massive increase has been artificially driven by the April 1st stamp duty increase deadline.
“The increased growth in London is almost certainly a knee jerk reaction caused by the introduction of the new stamp duty rates, with investors buying up properties quickly for buy-to-let and second homes before the higher tax kicked in.
‘We expect that over the course of the next couple of months, prices will fall again. Perhaps not back to the level they were in February but certainly to below the huge averages that the pre-April 1st deadline created.
“With a flurry of purchases having taken place, many investors in the market for a second property or buy to let have now added to their portfolio, so demand will fall.
“We’d usually see this volume of purchases spread over a couple of months so it’s highly likely demand for property will dip below the normal levels, helping to push prices down a little more. This all means that regular buyers should see a glimmer of light at the end of the tunnel, albeit a small one.”