Residential property prices continued to soar in March as buy-to-let landlords rushed to beat the government's stamp duty changes adding to the widening supply-demand imbalance in the market.
With a major shortage of housing available, UK property prices increased by 9% in the year to March 2016, up from 7.6% in the year to February 2016, fresh figures from the Office for National Statistics (ONS) show.
Property price inflation was led by England, up 10.1% year-on-year, fuelled largely by London, where the average price of a home rose by 13%.
“Fears of Brexit appear to be hitting the wealthier, higher-end of the property market, while having no noticeable impact on slowing down house prices for the mainstream market – particularly in areas of high demand like London and the South East,” said Andy Sommerville (below), director of Search Acumen.
“The only areas to see slight respite in London are ones that will unaffordable for most buyers in any case – such as Kensington High Street and Hamptead. Perhaps a slowdown in these areas could cause a domino effect as some commentators have speculated, but there is no evidence of this in today’s ONS data,” he added.
Home prices rose by 6.4% in Northern Ireland and 2.1% in Wales, but fell by 6.1% in Scotland.
Excluding London and the South East, UK property prices rose by 5.9% year-on-year; on a seasonally adjusted basis, with the average price of a residential property rising by 2.5% between February and March to hit an average of £292,000.
First-time buyers continue to be faced with the toughest challenge when it comes to prices, with those getting onto the first rung of the property ladder paying 9.7% more this year than those who purchased a home back in March 2015, leaving many prospective first-time buyers locked into renting.
“As supply problems cause prices to rise, the additional time needed to save for a deposit is delaying property ownership plans,” said Richard Sexton, director of chartered surveyor e.surv.
With the impetus provided by the stamp duty deadline now gone and with growing uncertainty around next month’s EU referendum, property price growth looks set to cool in the near term, but Paul Smith (pictured), CEO of haart estate agents, believes that any slowdown will simply be “a blip on the horizon” as the power of the UK property market will “outweigh any short term insecurity”.
“Our data shows there were 11 buyers chasing every property to come onto the market in March whilst transactions surged 19% on the month,” he said.
“London, in particular, will remain a global safe haven for investment whatever the outcome [of the referendum],” Smith added.