First-time buyer sector given boost

Updated: 
For sale signThe first-time buyer proportion of the housing market has hit a 10-month high due to a "last-minute rush" of people trying to beat a stamp duty deadline, estate agents have said.

Some 24% of house sales were made to first-time buyers last month, as a two-year stamp duty concession for properties worth between £125,000 and £250,000 came to an end, the National Association of Estate Agents (NAEA) said in its monthly housing report.

The first-time buyer proportion of the market fell back to a three-year low last autumn as those who struggled to raise a deposit remained trapped in the rental sector, but it has been slowly recovering in recent months.

But estate agents fear that the market, which is still seen as patchy and subdued, will be disrupted now that the concession has been removed.

Wendy Evans-Scott, president of the NAEA, said: "As our member agents predicted, the termination of the stamp duty holiday helped to fuel a last-minute rush from people hoping to escape this tax on aspiration.

"It is clear that significant demand existed for this important tax break for those seeking to buy their first home. In light of these new figures, the Government's decision to remove such vital financial support for what is an extremely fragile part of the housing market seems short-sighted."

An average of 297 house hunters registered with estate agents per branch last month, the highest level of demand in five months.

Sales levels remained consistent, but sellers appeared more reluctant to put their homes on the market, with the typical number of properties for sale dropping to 61 per branch, down from 63 in February.

Ms Evans-Scott said: "The slight drop in reported supply levels suggests some caution amongst sellers, who were waiting until the full facts of the Budget were established and how that might affect house prices. In addition, the recent move by some major lenders to severely limit the availability of interest-only mortgages is no doubt dampening the levels of supply in the market."

Several lenders have recently restricted their interest-only deals and will only lend a maximum of 50% of the home's value. More than a million borrowers also face mortgage hikes from next month following a string of lenders raising their standard variable (SVR) rates, blaming the weak economy and higher mortgage funding costs.

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