ondon’s pandemic property mini-boom hit the buffers in December when prices suffered their biggest fall since the market reopened in May.
The average cost of a home in the capital dropped 1.1 per cent in the month to £496,066, according to latest figures from the Land Registry. London was the only region in the country to record a fall.
That dragged the annual rate of increase down from seven per cent in November to just 3.5 per cent in December, the lowest in the UK.
Property experts said the dramatic turnaround was likely to be caused by buyers giving up hope of completing purchases before the 31 March deadline for the stamp duty holiday.
Chancellor Rishi Sunak waived the tax for all purchases up to £500,000 in July to boost the property market.
The perk is worth up to £15,000 but deals have to be completed before April to qualify, although there are reports that a six week extension is under consideration.
It generated a remarkable surge in buyer registrations and offers over the summer and Autumn that now appears to be petering out.
North London estate agent Jeremy Leaf said: “The market has come off the boil as the possibility of profiting from that tax holiday recedes and the reality of juggling home schooling and further restrictions begins to bite.
“However, there is still some life in the market as lockdown helps to concentrate many potential buyers and sellers’ minds as far as moving is concerned.
“Intense speculation remains as to whether the 31 March date will be extended and we can’t help but have sympathy for many who have started the process several months ago who have been unavoidably delayed by a backlog in searches, surveys, conveyancing, or all three, to say nothing of problems in the new-build industry.”
But Nick Barnes, head of research at London agents Chestertons said the market still had momentum heading into the Spring despite the December slowdown.
He said: “In spite of lockdown restrictions, there are still plenty of households who are keen to move. So far in February, Chestertons has seen a 15 per cent increase in newly agreed sales and finalised 54 per cent more exchanges compared to the same period in February 2020.
“We expect this number to rise as buyers remain keen to try to beat the stamp duty holiday deadline.
”How the housing market reacts once the Stamp Duty deadline has passed remains to be seen. The news that Rishi Sunak is considering extending the stamp duty holiday deadline by six weeks will be a relief for many but how quickly the economy recovers once the lockdown restrictions are relaxed will also be a key factor.”