House prices down 1% in March
House prices fell 1% in March to an average of £163,327, according to Nationwide.
Compared to a year ago, prices are now 0.9% lower and this is the first time in six months that the annual figure has shown a decline.
The main reason for the fall is the end of the stamp duty holiday after two years, which finished on Sunday.
Nationwide says around 100,000 first-time buyers will now have to pay stamp duty on properties between £125,000 and £250,000 this year, adding around £1,800 to the cost of each new house.
"This dampening effect on housing market activity and prices may fade over the course of the summer, especially if the wider economic outlook begins to improve and other policy measures, such as the government's NewBuy scheme, are successful," says Robert Gardner, Nationwide's chief economist.
"However, in our view, the challenging economic backdrop is likely to continue to act as a drag, with house prices moving sideways or modestly lower in the next 12 months," he adds.
Nicholas Ayre, director of UK buying agents Home Fusion, says: "It's a fair assessment that overall prices will move sideways in the next year.
"Annual prices are back in the red for the first time in six months but, hand on heart, that's probably where they belong. While the end of the stamp duty holiday doubtless contributed to the sharp decline in March, prices generally are being violently buffeted by the extreme shortage of stock."
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.