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House prices fell in April but dip ‘only temporary’

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UK house prices fell in April as buyers rushed to complete purchases before the original stamp duty holiday deadline.

Average house prices fell 1.9% between March and April, according to the Office for National Statistics (ONS).

It was the first month house price growth has slowed since July 2020.

The average house price fell back around £5,000 from March, to £250,772. However, it was still up £20,000 compared to a year earlier.

On an annual basis, house prices increased by 8.9% over the year to April, down from 9.9% in March.

The stamp duty holiday, introduced last year to help buyers financially hit because of Covid, was originally due to end in March. The deadline has since been pushed back to 30 June.

The ONS said: “As the tax breaks were originally due to conclude at the end of March 2021, it is likely that this inflated March’s average house prices as buyers rushed to ensure their house purchases were scheduled to complete ahead of this deadline.”

House prices in London were still the highest in the UK, but they dropped from an average of £500,000 in March to an average of £492,000 in April.

Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “House prices dropped in April, which is bound to unsettle homeowners after almost a year of accelerating price rises. However, this isn’t necessarily the beginning of the end for house price growth, it’s more likely to be a sign of what an arbitrary deadline can do to a market.

“At this stage we’re not expecting this to be the ultimate turning point for the market, but it’s a useful wake-up call for buyers, and a reminder that house prices aren’t a one-way street.

“The small drop in April doesn’t come as an enormous shock. The stamp duty holiday deadline sparked a frenzy, as buyers rushed to complete before the end of March. So much demand focused into a relatively short window created a price bump in March. In April we saw this drop back slightly, as we tend to do after this kind of deadline.”

She added: “A change in direction for prices is bound to spark concern among homeowners. However, it’s worth seeing this in context: prices are still up almost 9% in a year, and although it’s the first time price rises have slowed since July last year, it’s also still the second highest annual price rise figure we’ve seen since 2014.”

Paul Stockwell, chief commercial officer at Gatehouse Bank, said: “The original stamp duty discount deadline of March has made itself felt with a monthly dip in house prices, but annual growth is still remarkable.

“There remains a shortage of properties coming onto the market in many areas, resulting in intense competition in some cases, and this factor is likely to keep prices pushing upwards throughout the summer.”

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