House prices suffered their sharpest monthly fall in more than two years in March, as first-time homebuyers braced for the removal of stamp duty exemption, mortgage lender Nationwide said.
Nationwide reported one per cent seasonally adjusted fall in house prices on the month, the biggest since February 2010, and a sharp contrast to the 0.3 per cent rise predicted in a Reuters poll of economists and February's 0.4 per cent increase.
An exemption from stamp duty land tax for first-time buyers of properties costing under 250,000 pounds expired on March 24. Natonwide's data is based on mortgages it approves, and it said that approvals in March would generally be too late for purchases to be finalised before the March 24 deadline.
On the year, house prices were 0.9 per cent lower in March, the biggest annual fall since June and again confounding analysts' forecasts for a 0.8 per cent rise.
"A slowdown was to be expected, given the imminent expiry of the stamp duty holiday, which had provided a temporary boost to house prices in early 2012 as buyers brought forward purchases that would otherwise have taken place later in the year," said Nationwide economist Robert Gardner.
Prices might pick up later in the year if the economy improves, but overall prices in a year's time were likely to be unchanged or slightly lower, Gardner added.
After a roughly 20 per cent fall at the start of the financial crisis, house prices have been generally flat and activity sluggish in response to weak wage growth and slowly rising unemployment. Prices in central London, which attracts international buyers, have been an exception.