Stamp Duty changes boost December’s property market
House hunters shopping in the middle band of the market, for homes valued between £251,000 and £925,000, took advantage of December’s Stamp Duty reforms as estate agents reported a spike in sales.
A fifth of agents surveyed by the National Association of Estate Agents (NAEA) said they saw an increase of sales in this band, while one in 10 reported an increase in sales of properties up to £250,000.
Under the old rules homebuyers would pay tax at a single rate on the whole property price, known as a slab structure. After December’s announcement property hunters only pay the rate of tax applicable to the value of their home which falls within that band.
This means for an average family home worth £275,000 under the old rules buyers would be faced with a bill of £8,250 in Stamp Duty tax. Under the new rules this has now been slashed to £3,750.
The changes spurred would-be buyers into action following the announcement. NAEA members reported the highest level of registered home buyers per branch in December, around 360 on average, for 10 years.
Mark Hayward, managing director of the NAEA, said December was typically a quieter month for the property market so it was clear the reforms had left buyers feeling encouraged.
“The changes are obviously in the beginning stages of giving the market the boost it needs making buying more affordable for many,” he added.
The findings revealed a 2% increase in percentage of sales made by first-time buyers in December. This took the number of sales made by first-time buyers from 24% of total sales in November 2014 to 26% in December.
Almost half of those taking their first steps onto the property ladder were aged 18 to 30, whereas in November this age group made up 38% of sales to total first-time buyers.
But the number of houses available for sale on member agents’ books in December did not follow suit.
The number of houses available per branch was seasonally low at just 45 properties per branch, compared to 50 in November 2014 and 47 the year before in December 2013. The lack of supply, and ultimately lack of choice for prospective buyers, saw members record on average just five sales per branch in December compared to eight the previous month.
But Hayward said the lack of supply was not surprising because of the time it took to put a house on the market for sale.
“Typically, a lull in activity is expected for this time of year so the seasonally high level of demand is unusual in itself. This is just the start of the changes to the market – we would hope to see the new reforms eventually balance the see-saw of supply and demand, so it will be interesting to monitor the true impact over the course of the next few months,” he said.