The recent Stamp Duty changes announced in last week’s Autumn Budget will have only a modest impact on demand, lender the Nationwide has revealed.
Commenting within its monthly house price index published today, it says that in “many regions, first time buyers already paid little or no stamp duty as the price of the typical first time buyer property was below the previous threshold of £125,000”.
Nationwide also says the Stamp Duty will benefit mostly first time buyers in London and the South East, and help sure up values for existing home owners in these areas of the UK.
Its figures bear this out (see box, left). The Stamp Duty changes mean that in London, for example, 11% of first time buyers who would have previously paid on average £13,102 when they bought a property will now pay no tax, while in the North almost all first time buyers will now pay no tax, although until now they were only paying on average £100 in Stamp Duty.
“Despite the enthusiastic reception given to the cut in Stamp Duty for first-time buyers announced in last week’s Budget, it’s too early to detect its impact in the increasingly stagnant picture painted by the Nationwide,” says says Jonathan Hopper, Managing Director of Garrington Property Finders (pictured, right).
“Even then, no-one should expect the Chancellor’s Stamp Duty give-away to be a silver bullet. As the Nationwide’s analysis shows, outside London it will only affect a tiny minority of first-time buyers.
“More importantly, stimulating demand at the bottom end of the market won’t help much if the market remains blocked at higher price points.
“To function properly, the market relies on the whole chain working smoothly, with buyers at all levels able to move up the ladder.”
Nationwide’s November House Price Index also revealed that house prices rises slowed during November and the average now stands at £209,998. Prices have risen by 2.5% so far this year.
“While house prices may be rising, the rate of actual price growth has been stalling, reflecting the market’s current shortage of affordable housing,” says Paresh Raja, CEO of bridging specialist MFS (pictured, left).
“With inflation outpacing price growth, a significant number of prospective home buyers are not able to act on their property intentions.
“In part, this explains why the Government has removed stamp duty for first time home buyers; alleviating some of the financial burden affecting entry-level investors so that more people are able to get their foot on the property ladder. It will be interesting to see how this affects property prices over the coming months.”