Party says auction prices reflect true state of market and demands urgent stamp duty reform

The average price of homes sold at auction has plunged by one-fifth since 2007, the Liberal Democrat party has warned.

Calculations by Lib Dem Treasury spokesperson Lord Oakeshott found that the average auction price of residential properties in the second quarter of 2008 was down 18.7% from the same quarter in 2007. This is an average fall of £32,000, from £170,757 to £138,857.

Lord Oakeshott said: “Auctions are the real deal, with real buyers who have to exchange contracts and pay their deposit when the hammer falls. The published house price indices are well behind the market drop.”

Life peer Oakeshott went on to blame stamp duty for the falling prices.

“Deferring or suspending stamp duty with house prices in free fall would be like throwing a bucket of water at the Great Fire of London and risks sucking vulnerable first-time buyers into negative equity,” he said.

“Stamp duty needs serious long-term reform, not a quick fix to save Gordon Brown's skin.”