UK house price growth is at its slowest since 2013, despite the cost of buying a house hitting record highs. The capital was particularly affected, as changes in stamp duty and fears of a mansion tax hit sales.
According to figures from LSL property Services, March 2015 had the smallest annual rise in property prices for 16 months, with the rate of growth just 5.6 per cent. Buyers will still have to face high prices, however, with the average cost of a house now £275,133. London's growth slowed significantly, dropping 0.9 percentage points to 9.2 per cent.
London is the region with the highest average price: the cost of a home in the region was £559,665, twice the February rate for England and Wales.
Why it’s interesting
The election may be weighing on the data too, which is to be expected as the housing market is often affected by uncertainty. LSL said that that sales were up 11.6 per cent in March – just half the figure they would expect to see at this time of year.
Also attention grabbing is that the slow down is more obvious in the south, and especially London, where fears over a mansion tax and the changes in stamp duty are being felt. The effects may subside when the election is over, when fears either subside or become reality.
What LSL said
Adrian Gill, director of Reeds Rains and Your Move estate agents, said:
Examining the regional pattern of movement, it becomes apparent that we’re seeing less of a downturn than a convergence. The radical stamp duty overhaul has greatly boosted the prospects of buyers across the country, and injected new life into areas where prices have been stalled and the recovery is yet to show its face.
But the small minority of those negatively affected by the restructuring of the old slab system are disproportionately concentrated in the more expensive, southern regions of England. Naturally, London has been the hardest hit at the sharp end of this reform, and also most directly threatened by future mansion tax, possessing the lion’s share of high-end property
A combination of factors are affecting growth, but the market is on a solid base. Once the election is over and changes to stamp duty bed in, we’ll have a better idea of the state of play.