October 28, 2024
Stamp duty concerns ahead of budget as UK house prices rise amid record sales #UKFinance

Stamp duty concerns ahead of budget as UK house prices rise amid record sales #UKFinance

CashNews.co

UK house prices rose 1% in September to an average of £267,500 as rising incomes and the lowest mortgage rates for two years are supporting the highest level of new sales agreed since autumn 2020.

Property site Zoopla said the UK housing market is set for a landmark year in 2024, with the total value of homes in the sales pipeline surging by 30% to £113bn.

House price growth has risen by 1% annually, up from a 0.9% contraction recorded a year ago.

While price inflation remains subdued due to a high supply of available homes and affordability constraints, the sales pipeline has reached its largest volume in four years. The 306,000 homes currently progressing toward completion represent a 30% increase in value compared to last year.

House prices are advancing at above-average rates in affordable regions, including the North-East (2%), Yorkshire and Humberside (2%), and Scotland (2.4%). Northern Ireland leads with a notable 5.6% increase. At the other end of the spectrum, prices in the South-East and East of England have dipped slightly, showcasing yet again regional contrasts in affordability and demand.

First-time buyers (FTBs) are expected to form the largest buyer cohort in 2024, comprising 36% of all home purchases. With mortgage rates easing and rental costs accelerating, FTBs are now benefiting from a 17% cost advantage compared with renting — up from 2% differential just a year prior.

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A key policy shift could affect first-time buyers in the upcoming budget, with a possible rollback of recent stamp duty relief measures. Currently, FTBs pay no stamp duty on properties up to £425,000 in England and Northern Ireland, and partial duty for homes up to £625,000. However, should these thresholds revert, an estimated 20% of FTBs would need to pay full stamp duty, with some buyers in high-value areas facing tax increases as high as £15,000.

Richard Donnell, executive director at Zoopla, said: “It is positive to see the sustained increase in sales activity over 2024 which reflects growing confidence amongst buyers and sellers supported by lower borrowing costs and rising incomes. Overall, the market remains on track for a modest 2% price increase in 2024 and 1.1 million sales.

“First-time buyer numbers have recovered as mortgage rates have fallen but a sizeable deposit is still required to buy. Possible changes to stamp duty relief will only create further barriers to ownership for this group who already face significant affordability constraints.

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