End of tax break prompts house price jump

 
Julian Harris
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HOUSE prices sprang upwards last month as first time buyers rushed to beat the expiry of a temporary break on stamp duty, yet the market as a whole remains sluggish.

Prices jumped by 2.2 per cent in March, the Halifax reported yesterday, bouncing back from February’s 0.4 per cent monthly decline.

Yet the average cost of a home was still down 0.1 per cent in the first three months of the year, compared to the previous quarter. And March’s prices came in 0.6 per cent lower than at the same time in 2011.

Volatility in the month by month figures is being prompted by “the historically low level of sales”, Halifax said.

And new government initiatives will fail to stimulate activity in the marketplace, according to economist Melanie Bowman from Moody’s Analytics.

The coalition is backing some mortgages on new build properties in a bid to reduce the size of required deposits, particularly for first time buyers. It has also re-launched the right to buy scheme for social tenants.

Yet the programmes are “unlikely to boost demand substantially”, Bowman said. “Households face a number of headwinds this year which will deter them from moving house or trying to get on the property ladder.”

Cash purchases in London are still bucking the trend, according to David Newnes of LSL Property Services. “London has bumped up national prices over the past year, as cash purchases for high-value properties have proved a popular way for wealthy buyers to protect finance from global economic uncertainty,” he said.