Rush to beat stamp duty holiday boosts housing market

House sales were up in January as an increased number of first-time buyers made the most of the stamp duty holiday which is to end in March, the Royal Institution of Chartered Surveyors (RICS) says.

According to January figures from the RICS' UK Housing Market Survey, a 12 per cent increase of surveyors from across the UK reported a rise in agreed sales, outstripping those who reported a fall.

Following a two year exemption, the 1 per cent stamp duty rate for first-time buyers on properties worth between £125,000 and £250,000, will be reintroduced on 24 March.

The RICS' survey suggests that the current stamp duty relief, which can save up to £2,500 for the first-time buyer, is largely driving the fluctuation of housing sales, producing 'an increase in activity at the lower end of the market.'

19 per cent of surveyors remained optimistic about the housing market and predicted transactions to pick up over the next three months as buyers rush to take advantage of the relief - the strongest survey reading since May 2010.

Recent data from the Council of Mortgage Lenders (CML) also indicated that the number of first-time buyers was on the up.

Figures from the CML show that 18,700 home loans were advanced for first-time buyers, up by 7 per cent in volume and 10 per cent in value, from November to December 2011.

Despite the recent increase in interest from new buyers, surveyors reiterated that various factors are continuing to hold back the market.

Michael Newey, a spokesperson for RICS, says: "With first-time buyers no longer exempt from stamp duty as of the end of March, it seems that some are looking to purchase homes before the deadline and, as a result, surveyors are relatively optimistic for the coming months. However, many problems with the market still exist and the lack of affordable mortgage finance is still preventing many from getting onto the property ladder. Prices are still falling across most parts of the country, but expectations for future prices have become less pessimistic."