March saw the largest single monthly rise in house prices since the last recession with London rising £30,000
Official figures from the Office for National Statistics (ONS) show the average property rose in price by £8000 to £292,000 in a single month, the biggest rise since the last recession. London prices rose by a staggering £30,000 in just March.
The biggest factor in the rise was new stamp duty rules where people owning a second property would pay an extra 3% in stamp duty tax from April.
Jeremy Duncombe, director of the Legal & General 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.’
Jeremy Leaf, a former Royal Institution of Chartered Surveyors chairman and north London estate agent, adds: ‘We might have expected the house-price increases to be higher bearing in mind the surge in activity prior to the stamp duty hike in April. However, this is likely to be the last big rise for a while as more realism enters the market, although a shortage of listings and low transaction levels may underpin house price increases in future.’
The Council for Mortgage Lenders figures reveal that homeowners borrowed £13.8billion for house purchases in March, up 59 per cent month-on-month and 60 per cent year-on-year.
First-time borrowing was up 32 per cent monthly and home movers up 75 per cent.
Howard Archer, economist at IHS Global Insight, said: ‘A potential major downside risk to housing market activity and prices comes from the vote on EU membership on 23 June. A vote to leave the EU would be liable to see a marked hit to UK economic activity over the rest of this year and in 2017 amid heightened uncertainties, which would likely weigh down heavily on the housing market.’