Recent reports from major lenders have highlighted a surge in property values over the past few months, but experts are now warning that the market should be braced for a sharp slowdown come April.
A study from Nationwide revealed that prices peaked last month by 0.3% and, according to Halifax, values soared by 9% year-on-year to February 2016.
However, many predict that the market has of late been dominated by a ‘stampede’ of buy-to-let activity, with budding landlords rushing to beat the Government’s second home stamp duty surcharge to be introduced at the end of March.
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.
“We expect activity to continue to rise before it starts to let up.”
But a number of economists are predicting a steep plunge in prices from the beginning of April, after the new changes take effect.
Robert Gardner, chief economist at Nationwide, said: “The impending increase in Stamp Duty on second homes 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.”
Once a chunk of investment buyers are taken out of the market, experts believe there could be a ‘vacuum effect’, as aspiring first and second-time buyers will be unable to meet inflated prices.
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