London house prices break £300,000

The average asking price of a home in London is now more than £300,000, new figures show.

And 98 per cent of buyers in the capital have to pay stamp duty land tax, according to property website Rightmove.co.uk - which monitors house prices at estate agents across the country.

Across England and Wales, the last four weeks have seen average house prices rise 0.9 per cent to £203,399 - but London has led the charge with prices rising almost twice as much as the rest of the country to stand at £300,719.

"You’d have thought record prices and most buyers being caught by the stamp duty trap would have slowed the market. However, the need to put a roof over your head and the lack of other options mean buyers are faced with no other realistic choice than to stretch themselves further if they can," said Rightmove commercial director Miles Shipside.

However, the pace of house price rises might well be slowing, with March's 0.9 per cent average rise just a third that of February.

"After several months of confidence building activity, it could be that we are entering a period of stability. We expect prices to fluctuate within a fairly narrow range according to local supply and demand, with property having to be accurately priced or it will not sell," Mr Shipside predicted.

"The exception will be the hotter areas of demand, especially in the south where there has been a disproportionate increase in disposable income."

But even with a slowing property market - more and more people are being hit by stamp duty.

Overall, just 84 per cent of properties across the country fall below the stamp duty threshold of £120,000 - with less than two per cent of properties for sale in Greater London now priced under this minimum threshold.

All properties that are sold for more than £120,000 are subject to stamp duty, and despite the chancellor doubling this lower threshold in his budget last year, increases in the average asking price mean that more tax has been gathered in the nine months after this change than was gathered in the nine months before it.

Rightmove calculates that this threshold would have to be raised 38 per cent to £166,000 to prevent the majority of first-time buyers paying the tax.

Regionally, the threshold would have to almost double to £238,000 in London to see 40 per cent of property sales exempt from the tax (the traditional percentage of the market made up by first-time buyers), while in the north the nil threshold would have to be raised to the more modest £128,000 to see the same proportion of properties exempt.

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