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Stamp duty rush boosts March house prices, says ONS Stamp duty rush boosts March house prices, says ONS
(about 1 hour later)
UK house prices increased in March at their fastest monthly rate since 2004 as buy-to-let investors accelerated their purchases ahead of a stamp duty rise in April.UK house prices increased in March at their fastest monthly rate since 2004 as buy-to-let investors accelerated their purchases ahead of a stamp duty rise in April.
The Office for National Statistics said its UK house price index increased by 2.5% between February and March to take the average price of a home to £291,820.The Office for National Statistics said its UK house price index increased by 2.5% between February and March to take the average price of a home to £291,820.
Only a steep drop in prices across Scotland, which has seen values slump since the oil price collapse in 2014, stopped the annual rate for the UK hitting double figures. The UK average home increase was 9% over the last year while Scotland fell 6.1%.Only a steep drop in prices across Scotland, which has seen values slump since the oil price collapse in 2014, stopped the annual rate for the UK hitting double figures. The UK average home increase was 9% over the last year while Scotland fell 6.1%.
Related: House prices fall in London’s luxury postcodesRelated: House prices fall in London’s luxury postcodes
London continued to outstrip the rest of the country, though most regions grew strongly and are now above their 2008 peak.London continued to outstrip the rest of the country, though most regions grew strongly and are now above their 2008 peak.
Separate data from HMRC showed that housing transactions surged by 70% in March from a year ago as buyers rushed to complete purchases before the supplementary 3% stamp duty charge on second homes came into effect.Separate data from HMRC showed that housing transactions surged by 70% in March from a year ago as buyers rushed to complete purchases before the supplementary 3% stamp duty charge on second homes came into effect.
Jeremy Duncombe, director of Legal & General’s mortgage club, said: “Given that these figures cover the period leading up to the buy-to-let stamp duty rise, it’s no surprise that they show another strong monthly increase in house prices.Jeremy Duncombe, director of Legal & General’s mortgage club, said: “Given that these figures cover the period leading up to the buy-to-let stamp duty rise, it’s no surprise that they show another strong monthly increase in house prices.
“However, even without this surge in buy-to-let activity, house prices are still increasing annually at a rate that sits well above any rise in average earnings, making our housing market even less affordable as each month goes by. “However, even without this surge in buy-to-let activity, house prices are still increasing annually at a rate that sits well above any rise in average earnings, making our housing market even less affordable as each month goes by.”
The north-east was the only English region to remain below its peak before the financial crash after prices flatlined in March. The region, which has struggled with steel plant closures in the last year, remains 3.5% below the high point registered in January 2008. The north-east was the only English region to remain below its peak before the financial crash after prices flatlined in March. The region, which has struggled with steel plant closures in the past year, remains 3.5% below the high point registered in January 2008.
Wales reached another record high in March while Scotland is 0.9% below the pre-economic downturn peak and Northern Ireland 42.3% lower than 2008 Wales reached another record high in March while Scotland is 0.9% below the pre-economic downturn peak and Northern Ireland 42.3% lower than 2008.
Richard Snook, senior economist at PwC, said the strong performance was once more centred on London and the south-east, where annual growth in house prices remained in double digits at 13.0% and 12.2% respectively.Richard Snook, senior economist at PwC, said the strong performance was once more centred on London and the south-east, where annual growth in house prices remained in double digits at 13.0% and 12.2% respectively.
“There are no signs of any Brexit related slowdown in this month’s figures, although the underlying trends are masked by the effects of the stamp duty change.”“There are no signs of any Brexit related slowdown in this month’s figures, although the underlying trends are masked by the effects of the stamp duty change.”
Howard Archer, chief economist at IHS Global Insight said the underlying trend would be of weaker growth once buy-to-let investors and second-home buyers revert back to the normal trend.Howard Archer, chief economist at IHS Global Insight said the underlying trend would be of weaker growth once buy-to-let investors and second-home buyers revert back to the normal trend.
“There is evidence that housing market activity is now being seriously pressurised not only by a marked waning of interest from the buy-to-let and second home sectors following the rush to beat April’s Stamp Duty increase for these sectors, but also by heightened concerns and uncertainties over the UK economic outlook, particularly in the run-up to June’s referendum on EU membership,” he said. “There is evidence that housing market activity is now being seriously pressurised not only by a marked waning of interest from the buy-to-let and second home sectors following the rush to beat April’s stamp duty increase for these sectors, but also by heightened concerns and uncertainties over the UK economic outlook, particularly in the run-up to June’s referendum on EU membership,” he said.
High-end London homes have seen prices fall since April according to some reports as the higher stamp duty rates and fears of a Brexit deter wealthy buyers. High-end London homes have seen prices fall since April, according to some reports, as the higher stamp duty rates and fears of a Brexit deter wealthy buyers.
The International Monetary Fund is one of many economic forecasters to warn that UK house values will plummet should Britons vote to leave the EU in the June referendum.The International Monetary Fund is one of many economic forecasters to warn that UK house values will plummet should Britons vote to leave the EU in the June referendum.