House prices in London fell over the first quarter of 2012 as the first-time buyer stamp duty holiday concession came to an end, according to a study.
Prices in the capital dipped by 0.7 per cent in the three months to the end of March, compared with an average fall of 0.1 per cent across the country as a whole, Nationwide said.
However, London still recorded higher price increases than any other region over the last 12 months. The average property in the capital now costs £293,375, some 2.3 per cent higher than this time last year, while the average home across the UK went up in price by 0.2 per cent to reach £162,722.
A surge in first-time buyers looking to take advantage of the stamp duty concession for properties worth between £125,000 and £250,000 was reported by some estate agents and lenders. But there are fears it could be followed by a dip once the one per cent duty is back in place.
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Kamlesh Padhra, managing director of Harrow-based Infinity Property Solutions, said although prices have remained stable in the north-west London area, many would-be first-time buyers remain stuck in the rental market.
“There is a problem that we have with first-time buyers who would tend to have bought property in the past, they are now tending to hold back and rent instead,” said Padhra. “But there is not a surplus of rental property on the market and the price of renting is quite high compared to a mortgage repayment.”
Much of the movement in the property market in north-west London has been for modestly sized properties, rather than larger family homes, according to Padhra.
“I see more movement when it comes to flats, one and two-bedroomed flats are selling more quickly and at a good price compared to three and four-bedroomed houses. People cannot afford to pay for the freehold on a three-bedroomed property so people are downsizing.”
Padhra believes that house prices are more likely to remain stable over the coming months in areas nearby to schools and amenities.
“I think in the next 12 months that prices will be stable in prime locations, especially if you are in a catchment area with good schools and hospitals. I have not seen properties drop in price there. Houses in the HA7 postcode in Stanmore, for example, have good schools in the area and the prices have stayed stable for the past two years.”