First-time buyer sales have slumped to a seven-month low following the withdrawal of a “crucial” stamp duty exemption, estate agents said today.
The National Association of Estate Agents (NAEA) said 17% of sales in May were made to those buying their first home, compared with 24% during the previous month.
Lenders and estate agents reported a rush to complete deals ahead of the deadline for the two-year concession in March, with sales which would have otherwise taken place later in the year being bunched up.
Lenders have been tightening their borrowing criteria amid the weak economy and the eurozone crisis, and borrowers with smaller deposits are expected to have a particularly tough time getting a deal in the coming months.
NAEA president Mark Hayward said: "Sadly, as the NAEA predicted, the Government's removal of the crucial stamp duty holiday for properties priced at £250,000 and under has hit the fragile first-time buyer market hard.
"At what is a very turbulent time for the economy both here and in the eurozone, which has prompted tighter mortgage restrictions from the major banks and placed increased pressure on household finances, the Government should be doing all it can to stimulate housing market activity."
Mr Hayward said it "remains to be seen" whether a "funding for lending" scheme announced by the Treasury and the Bank of England last month will mean house hunters get greater access to cheaper deals.
The share of first-time buyers recorded by the NAEA is the biggest slump since October last year, when first-time buyers made up 16% of the market, well below the pre-credit crunch average of around 40%.
Before last October, the figure had not been as low for more than three years, at the height of the financial crisis in December 2008, when first-time buyers stood at 10% of the market.
The number of house hunters registering at branches across the country also decreased, with 274 per branch in May compared with 294 in April as the seasonal summer slowdown kicked in.
Sales remained stable across the property market for a third month in a row in May, with an average of seven per branch.
Some 66 houses were on the market per branch in May, a slight increase on the 62 seen in April. Recent studies have suggested that house prices will soften further in the coming months as the number of houses being put on the market continues to outstrip the number of potential buyers.