London’s property market can ride high on the feelgood factor generated by the Olympics and defy gloomy forecasts, it has been claimed.
The Council of Mortgage Lenders (CML) said the nation’s property market was set for a lull during the summer months, after the end of the stamp duty holiday in March helped mortgage lending to hit a six-month high.
Gross mortgage lending went up by about 30 per cent from £10.3bn in February to £13.4bn in March, while this also left it 17 per cent higher than this time last year, the CML said.
The stamp duty holiday, which exempted first-time buyers from the one per cent stamp duty on homes costing less than £250,000, came to a close on March 24.
But MyLondonHome managing director Steven A. Herd said: “The stamp duty deadline has not had a big impact on the central London prices as so few properties were eligible.
“The market has been busy but not generated by the end of the stamp duty concession.”
Herd believes the property market in London can continue to perform well during the summer months, despite the downbeat forecast from the CML.
“Historically we have seen the market quieten when there has been an increase in activity due to an external factor but I do not agree with the CML on this occasion,” said Herd.
“The housing market is as much about feelgood factor as it is incentives and mortgage rates, and the forthcoming Diamond Jubilee and Olympics will have the county on a high. As long as lenders do not pursue tougher criteria the next quarter will remain as buoyant.”
The government recently introduced a NewBuy scheme, which sees it team up with lenders to underwrite a mortgage secured on a new-build flat or house.
Bob Pannell, the chief economist of the CML, had described the country’s property market as “relatively buoyant” in the past few months.
But he added: “However, we would be surprised if we did not see a drop in transactions over the next few months, following the end of the stamp duty concession, especially as it will take some while for NewBuy transaction levels to build.”
Building societies, banks and other lenders are all members of the CML. They undertake approximately 95 per cent off all residential mortgage lending in the country, which is said to have grossed £34.4bn in the first three months of 2012.
This figure is lower than the £37.8bn in the fourth quarter of last year, but 13 per cent higher than the first three months of 2011, the group said.