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Property asking prices continue to increase

Property asking prices continue to increase

Category: Mortgages

Updated: 19/03/2012
First Published: 19/03/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The housing market continued to show promise in February and early March, but there are worries that the end of the stamp duty holiday could stifle the recovery.

New sellers increased their asking prices by 4.1% in February and by another 1.6% in March.

It means that prices have risen by 4.9% over the first three months of 2012 – the largest increase in the first three months of the year since 2004, according to Rightmove.

The number of people searching for a home has also risen by 16% so far this year when compared with the same period in 2011.

But there is concern that any upturn could be cut short because of the end of the stamp duty holiday, which takes place on 24 March.

The combination of the end of the stamp duty holiday and the re-introduction of the 1% tax on properties between £125,000 and £250,000 has been described as 'a kick in the teeth' to would-be buyers who have saved hard to raise a deposit.

"For a first-time buyer it's already hard enough to raise the necessary deposit and now, as well as potentially losing between £1,250 and £2,500 in stamp duty exemption, asking prices for their target property types have increased by over £5,000 in the last year as well," said Miles Shipside, director of Rightmove.

"It's a kick in the teeth if you have saved hard, or begged and borrowed a meaty deposit and have just missed out on the bonus of avoiding stamp duty."

The Chancellor George Osborne said that the stamp duty holiday had not had the desired effect in the Autumn statement last year, but more recent data suggests first time buyers have taken advantage of the initiative in large numbers, particularly since the beginning of the year.

It is hoped that the new HomeBuy scheme will carry on some of the momentum, although it may have a limited effect as it will focus on new build homes.

Away from first time buyers, figures show that house prices in parts of London continue to soar.

In fact, the average asking price for a property in Kensington and Chelsea is now £2,000,120 as average prices in the capital have hit an new all-time high of just a shade over £455,000.

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