The recent changes to stamp duty for first-time buyers may only be a drop in the ocean, according to critics, but first-time buyers should still take advantage.
According to the latest figures released by Nationwide Building Society, the annual rate of house price growth remained stable in November at 2.5%.
Despite this, annual growth stays within the 2-4% range that has prevailed since March. Nationwide’s latest house price index revealed how low mortgage rates and healthy rates of employment growth are providing support for demand, but this is being partly offset by pressure on household incomes, which appears to be weighing on confidence. In addition, the lack of homes on the market is providing support to house prices.
The stamp duty question
On the back of this, according to Robert Gardner, Nationwide’s chief economist, the changes to stamp duty revealed in the Budget are unlikely to have much of an effect.
“The decision in the Budget to abolish stamp duty (SDLT) for first-time buyers purchasing a property up to £300,000 (with relief for those purchasing a property up to £500,000) is likely to have only a modest impact on overall demand,” he said. “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. The potential savings are more substantial for borrowers where house prices are higher, especially in London and the south-east.”
Gardner went on to say that, as the Office for Budget Responsibility had already noted, some of the benefit is likely to be passed on to existing homeowners through higher house prices, though overall impact on prices is likely to be very modest.
But the advice from some experts is to take advantage of the tax relief before house prices rise further, as savings can still be made.
Rightmove director and housing market analyst Miles Shipside said: “Speed and getting in early is important for aspiring first-time-buyers because supply of suitable properties is limited due to insufficient numbers of new-build property in this sector over the last decade.
“To take advantage of the initial momentum this will generate, owners of properties that are suitable for first-time buyers should think about coming to market if they have been thinking about making a move up the ladder themselves.”