Asking prices for homes in England and Wales reach record high in May

Asking prices for homes in England and Wales have reached a record average of £308,151 in May, according to a report on Monday.

Property website Rightmove said average asking prices rose £1,118 on last month despite a three percentage point stamp duty increase for buy-to-let investors and second home owners from 1 April, which was expected to slow the market.

The price of an entry-level home in England and Wales with two bedrooms or less - typically sought by first time buyers and buy-to-let investors - rose £11,298 on last month to £194,224 on average.

Croydon was the top property hotspot with asking prices jumping 18.6% on last year to an average of £298,770.

Dartford was also a popular area for people priced out of London with properties rising 18.5% to £244,310 on average.

London continued to surge with asking prices up 10.8% on the year to an average of £644,088. The East of England saw asking prices jump an annualised 10.1% to £334,538 on average.

Rightmove director Miles Shipside said the rush of buy-to-let investors snapping up properties before the increase in stamp duty had added to the supply shortage issue in the market, pushing prices higher as a result.

“Estate agents have perhaps been focused on getting investor sales through to completion before the tax hike, and some may have been surprised by the continuing momentum and scarcity of stock to meet ongoing demand,” he said.

“The net effect is eye-watering increases in asking prices in some towns, and is further stretching first-time buyers' affordability even though they are competing against fewer buy-to-let investors in the market.”

The report follows a data from RICS last Thursday which showed demand in the property market had weakened in April as homebuyers brought forward purchases to March to beat the increase in taxes.

RICS's monthly house price balance edged lower to +41 in April from +42 in March, its lowest since June 2015.

The latest house data from Halifax, also published last week, revealed property values in the three months to April saw the smallest annual increase since November 2015.

Average property prices in UK between February and April rose 1.5% on the previous quarter. The report from Halifax added that house prices dropped 0.8% in April month-on-month.