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A first-time buyer stampede for homes was under way across London today after Philip Hammond slashed £5,000 off stamp duty bills in his Budget speech.

Property website Rightmove said it saw a 54 per cent surge in searches for London properties up to £500,000 yesterday and estate agents reported buyers calling to raise their offers within minutes of the Chancellor sitting down in the Commons.

Property advisers said Mr Hammond’s surprise move to abolish stamp duty for all purchases by new buyers up to £300,000 — and on the first £300,000 of deals worth up to £500,000 — has had “an immediate and dramatic effect” on young people who had previously felt locked out of the property market.

It will cut the tax burden on the median London starter home of around £365,000 from £8,250 to £3,250 and will benefit the vast majority of first-time buyers in London.

Agents reported buyers were upping their offers by £5,000 to unblock stalled negotiations on flats and houses across the capital and the Home Counties commuter belt.

Lucy Pendleton, director of south-west London agents James Pendleton, said: “We had one person whose offer of £358,000 on a flat in Wandsworth was not acceptable at 12.30pm increasing it by £5,000 to £363,000 at 2.30pm.

"That was as a result of the stamp duty relief — the offer was accepted.”

However, there were fears that the change would stoke up the lower end of the property market, making it even harder for less affluent buyers.

There were also warnings a new stamp duty “cliff-edge” will see owners of properties valued at just over £500,000 having to cut prices to attract qualified buyers.

But buyers said the £5,000 saving would make “a surprising amount of difference both psychologically and financially”.

Karl Knipe, partner at Kings Group Estate Agents, with 15 branches across North London, said offers had been increased by £5,000 on houses in Enfield and Edmonton yesterday afternoon.

He said: “The property in Edmonton had just been reduced to £380,000 and the buyer was at a revised offer of £370,000, but the seller needed £375,000 to make things work. Unfortunately the buyer was at their limit and could not increase any further.

“Then the news came that the Chancellor had scrapped stamp duty for first time buyers for the first £300,000 in his budget.

“We contacted the buyer right away and she explained that she had just seen the news herself and so was prepared to use the saving in order to make the offer of £375,000 that the seller wanted.”

Housebuyers also said they saw a surge in offers yesterday. David Galman, director of sales at property company it had sold two properties at £200,000 and £250,000 at a scheme in Rickmansworth in Hertfordshire yesterday to buyers who had previously been hanging back.

However, there were also fears that the change will merely stoke up the lower end of the London property market making it even harder for less affluent buyers.

There was also warnings that will create a new stamp duty “cliff-edge” with owners of properties priced at just over £500,000 having to slash their prices to attract buyers who qualify for the relief.

But Millennial buyers said the saving would make “a surprising amount of difference both psychologically and financially” despite representing only a tiny fraction of the total cost of purchase.

Junior doctor Lizzie Harris, 28, who is looking to buy for around £400,000 in Kennington, said: ”I will feel much better that the £5000 is going into buying a home rather than to pay tax. It really does help.”

Jeremy Raj, partner at law firm Irwin Mitchell said:”I was sitting in a meeting with a Millennial colleague during the speech and her face lit up and she said:’Now I can buy furniture.'”

