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Major boost for regional housing markets increasing affordability

The stamp duty rate change will be a boost for all property buyers in England and Northern Ireland, but the regional housing markets will benefit the most.

While Chancellor Kwasi Kwarteng’s mini-budget has been the cause of a great deal of controversy – to say the least – the revised stamp duty thresholds and rates will have certainly be welcome news to many across the country. From first-time buyers to home movers and even buy-to-let investors, the new rates will make a difference.

In Zoopla’s latest UK House Price Index report for September, it reveals that the increased threshold, where all homes under £250,000 are exempt from the tax, takes 43% of properties out of stamp duty.

With homes in the regional housing markets, particularly the north of England, already representing greater value for money, the new tax rates are likely to be a particular bonus for these areas. A greater number of properties will either pay less or no stamp duty, which will be a welcome saving in the current climate.

Regional housing appealing to investors

While the likes of Manchester and Birmingham have been key investment locations for a number of years now, with both being seen as ‘second cities’ in the UK and attracting swathes of renters and high yields to boot, the regional housing markets have gone from strength to strength through the pandemic.

London has seen the lowest house price growth over recent years, and this was exacerbated by the ‘race for space’ sparked by the Covid pandemic. Home-working was a big driver in changing people’s priorities for their living locations, and this affected tenants as much as homeowners.

What’s more, the rise of businesses ‘north-shoring’ has spurred on a surge in employment opportunities away from the capital. Birmingham, Manchester and Leeds were recently named as some of the top cities for finance job prospects, while the north west in particular was hailed as bringing in the best rental yields for investors.

While property investors are of course still subject to the 3% stamp duty surcharge on any purchase, the new thresholds will see buyers gain greater value for money in regional housing markets.

A buyer’s market?

Zoopla’s September report reveals that annual house price growth now sits at +8.2%. It also estimates that higher mortgage rates could cut buying power by up to 28%. As house prices continue to rise, this is creating an affordability challenge for some.

As noted, though, the regional housing markets remain the most affordable compared to London and surrounding areas. In terms of asking prices, reductions are at their highest level since before the pandemic, which Zoopla notes could be the start of a shift towards a “buyer’s market”.

Yet demand for housing remains 8% above the five-year average, notes Zoopla, with appetite especially high for the more affordable parts of the market.

The highest annual house price growth comes from the north west town of Wigan, where property values have risen by +12% in the past 12 months according to Zoopla’s figures.

The report notes: “This momentum in price rises has supported measures of market activity in H1 2022. There are no immediate signs of a major slowdown in price inflation. The average UK house price has increased by 8.2% or £19,650 in the past 12 months, although the quarterly growth rate is slowing.

“Looking ahead, higher mortgage rates will have the greatest impact on activity in higher value markets and areas which have registered the greatest surge in prices over the pandemic.”

At BuyAssociation, we focus on property investment opportunities in the most up-and-coming locations across the country where the strongest growth is forecast, with a spotlight on many of the regional housing markets. Get in touch to find out more about what’s available.

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