House prices up over 5% in March to £200k average

House prices up over 5% in March to £200k average

Another index has revealed the impact on house prices of an incoming stamp duty rise, with Nationwide reporting annual house price growth in the UK up 5.7 per cent in March, putting the average property price at over £200,000.

Nationwide’s March index showed the price of a typical UK home increased by 0.8 per cent last month, while the annual rate of growth was the strongest since February 2015 and up from 4.8 per cent the previous month.

Robert Gardner, the lender’s chief economist, confirmed there has been a pickup in housing market activity in recent months, with the number of housing transactions and mortgage approvals rising strongly.

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“This is likely to have been driven, at least in part, by upcoming changes to stamp duty on second homes, where buyers have brought forward purchases in order to avoid the additional tax liabilities.

“This temporary boost to demand against a backdrop of continued constrained supply is likely to have exerted upward pressure on prices and helped to lift the pace of annual price growth out of the fairly narrow range of three to five per cent that has been prevailing since the summer.”

UK headlinesMarch 2016February 2016
Monthly index401.8398.7
Monthly change0.8%0.4%
Annual change5.7%4.8%
Average price (not seasonally adjusted)£200,251£196,930

The index also demonstrated a return of regional disparities in house price growth, with the only slight variation on this familiar theme was that, for only the fourth time in five years, London did not record the strongest rate of price growth, with the ‘outer metropolitan region’ occupying the top spot in the first quarter this year.

“Nevertheless, London still recorded the second fastest rate of growth, with prices reaching a new all-time high some 52 per cent above pre-crisis levels (compared with 9% for overall UK house prices),” commented Mr Gardner.

“Overall, the pace of house price growth generally moderates as you move from the south to the north of the country, with the North of England and Scotland actually recording modest house price declines in Q1, even though prices remain well below pre-crisis levels in those regions.”

Jeremy Leaf, a former RICS chairman and north London estate agent, said that while the March house-price figures, as expected, reflect a rush to beat the stamp duty hike for landlords and second homeowners, it is surprising that they aren’t higher.

“The real test for the market will come in the next two months as many investors pause for breath to see if prices soften sufficiently to allow them to come back in. However, on the ground we are still seeing keen interest from landlords who simply intend to negotiate harder on the price they pay going forward.

“It will be interesting to see whether investors fall away sufficiently and how many first-time buyers take their place in the expectation that the playing field will be more level.”