It may be a subdued housing market, but Nationwide said the balance of supply and demand had shifted in favour of buyers.
The housing market remained subdued in April with prices edging ahead by just 0.4% as Brexit uncertainty continued to dampen activity.
The average value of a UK home has risen by only 0.9% during the past 12 months, to leave the typical property costing £214,920, according to Nationwide Building Society.
Separate figures showed falling transactions had led to a 26% drop in stamp duty receipts during the first three months of the year, compared with the previous quarter.
A total of £1.76bn was raised through the tax in England, Wales and Northern Ireland, according to residential property advisory firm LCP's analysis.
That's £623m less than in the fourth quarter of last year, following a 21% drop in purchases liable for stamp duty.
LCP's analysis added back transactions and receipts from the Welsh Revenue Authority, since stamp duty has been replaced by land transaction tax in Wales.
Receipts were down across all categories, including first-time buyer homes, high-end properties and people purchasing second homes.
Naomi Heaton, CEO of LCP, said: “There is no doubt which external force is having the most destructive impact on the UK housing market, and that is Brexit.”
Why is this happening?
The political and economic uncertainty caused by Brexit has caused many potential buyers to delay their moving plans until the outlook is clearer.
This fall in activity, combined with already stretched affordability, has caused the property market to lose momentum, with April the fifth month running in which annual house price growth has been less than 1%.
The slowdown has been particularly acute at the top end of the market, which has further dented stamp duty receipts, as the tax is charged at a higher rate of 10% on the portion of a property costing more than £925,001, and at 12% on the portion costing more than £1.5m.
Who does it affect?
While the slowdown in the market is bad news for the Government’s stamp duty take, it is good news for buyers.
Nationwide said the balance of supply and demand in the market had still shifted in favour of buyers, putting people who want to go ahead with a purchase in a strong position to bargain.
First-time buyers are particularly benefiting from the situation, while they are also being supported by a raft of government measures to help people get on to the property ladder.
What’s the background?
Activity in the market looks unlikely to improve in the near future, with figures released by the Bank of England showing just 62,341 mortgages were approved for house purchase in March, nearly 5% fewer than during the previous month.
Hansen Lu, property economist at Capital Economics, said: “Sluggish house price inflation reflects the already high level of prices relative to incomes, as well as the effects of Brexit uncertainty.
“Looking ahead, with Brexit having been delayed until the start of the fourth quarter, housing market conditions are set to stay weak – making a recovery in housing demand unlikely.”
He added that even once a Brexit deal is done, property values still remain high relative to incomes, so prices are unlikely to start rising immediately.
Top 3 takeaways
- House prices edged ahead by just 0.4% in April
- The average value of a UK home has risen by only 0.9% during the past 12 months, to leave the typical property costing £214,920
- There was a 26% drop in stamp duty receipts during the three months of the year, on the back of falling transactions