Annual house price growth accelerated in February as investors snapped up properties ahead of the stamp duty hike in April.
According to Nationwide, average house prices were £196,930 last month, up 4.8% from the same time last year.
On a monthly basis, house prices increased 0.3% in February.
In separate figures, Halifax said that the annual rate of growth remained unchanged at 9.7%, with the average house price at £209,495.
Robert Gardner, Nationwide’s chief economist, said house price growth had remained in a fairly narrow range between 3% and 5% since the summer of 2015.
He said: “This trend was also maintained in February, with house prices up 4.8% over the year, a slight pickup from the 4.4% increase recorded in January.
“The number of mortgages approved for house purchase increased sharply in January to almost 75,000, up from around 71,000 approvals in December and the highest number since January 2014.
“However, much of the increase is likely to be related to the impending increase in stamp duty on second homes which is due to take effect in April 2016. This is likely to have brought forward a significant number of purchases, which in turn will probably result in a fall back in approvals during the spring/summer.
“Looking through this volatility we expect the underlying pace of activity to increase in the quarters ahead as improving labour market conditions and low borrowing costs provide ongoing support.”
Stamp duty will rise by 3% for landlords and second home owners from 1 April as part of the government’s efforts to dampen the buy-to-let market and free up property for first-time buyers.
Surveyors have reported a surge in buy-to-let investors looking to beat the April stamp duty deadline. The Royal Institute of Chartered Surveyors said in its monthly report that buyer enquiries rose for the tenth successive month in January, with the near-term pressure on prices intensifying.
Jeremy Leaf, a former RICS chairman and north London estate agent, said: “Property prices are steady as the market is being underpinned by buy-to-let investors and second home owners trying to beat the stamp duty hike in April.
“The Nationwide figures are slightly historic, reflecting what was happening in November and December rather than now. We expect activity to continue to rise before it starts to let up. The March figures will reflect the greater rush to meet the deadline but after April we expect a marked decline in activity as people have brought forward their transactions.”
Housing crisis
Gardner said there had been a particularly marked decline in home ownership rates amongst the younger age groups.
“The latest English Housing Survey showed that the proportion of private renters who expect to buy a home at some point in the future declined by four percentage points from 61% to 57% – the lowest reading since the survey began in 2008/09. Even amongst those who expect to buy a home, for most this remains a longer term aspiration, with 75% expecting it to take at least two years,” he added.
There are fears that first-time buyers are being squeezed out of the market due to the dwindling supply of suitable homes and ballooning property prices.
Tougher affordability checks from lenders and rising house prices have made it increasingly difficult for first-time buyers with smaller deposits to get on the property ladder.
A recent study by think-tank the Resolution Foundation found that the housing ladder is rapidly disappearing for most young working households on modest incomes.
According its research, over-45s now account for three-quarters of all home owners and that only one in 10 young people are likely to be on the property ladder by 2025.
“On the surface there is not much happening but underneath there is a seismic shift in home ownership brought about by lack of affordability and inaccessibility to the property market. More people are having to rent for longer and even though mortgage rates are at record lows, being able to access those deals is a challenge that many will fail.”
