Property Insights: Navigating Falling Prices, First-Time Buyer Trends, and Stamp Duty Reforms

Market Overview: House Prices Still Falling

The latest UK house price index from e.surv reveals a surprising trend: house prices have fallen over the past year. This is in stark contrast to most mainstream indices showing small gains. According to e.surv, average prices have dropped by 2.9% from April 2023 to April 2024. Despite this decline, the scale of price falls is reducing, with the Northwest region nearing positive growth.

The Southeast experienced the most significant annual rate fall at -6.6%, and overall transactions are at their lowest levels since 1995. The average house price in England and Wales now stands at ￡359,154, down 2.9% annually.

Richard Sexton, director at e.surv, comments: “Our index points to a fragile recovery this month. The average sale price of completed home transactions using cash and/or mortgages in England and Wales rose by a meagre ￡127 to ￡359,154. This means the average sale price in April is ￡18,920 lower, or 5%, below the peak reached in October 2022, but crucially some ￡43,750 - or 13.9% - higher than at the start of the pandemic in March 2020.”

First-Time Buyers on the Rise

Recent research highlights that first-time buyers are increasingly dominating the market. The proportion of mortgaged homebuyers has reached its highest level in four years. Analysis based on conveyancing quote requests from the really moving website shows that since last summer, the proportion of mortgaged buyers has risen from 72% in July 2023 to 83% in March 2024.

First-time buyers now account for 60% of all buyers in the market as of April 2024, compared to 54% in April 2023. Despite the challenges, these buyers are finding ways to enter the housing market, driven by increased mortgage availability and competitive rates.

Rob Houghton, chief executive of really moving, states: “It’s encouraging to see that first-time buyers are dominating activity, against the odds finding a way to get onto the housing ladder and begin their home ownership journey. Movement at the lower end of the market enables upsizers to move, which in turn will help boost downsizer activity by increasing the volume of properties available for them to buy.”

Stamp Duty Reform: Is It Enough?

There have been recent reports that the chancellor is considering cuts to stamp duty in the upcoming Autumn budget. Specifically, it is rumoured that the threshold before stamp duty is payable will increase from ￡250,000 to ￡300,000. While this might appear to be a positive step, it is seen by many as insufficient.

The proposed reforms are criticized for not addressing the broader issues within the housing market. The current stamp duty system is viewed as a barrier, especially for second steppers and older homeowners looking to downsize. There are calls for more significant changes, such as reversing stamp duty to be paid by the seller or scrapping it entirely for downsizers.

The current market scenario and the government's approach to stamp duty reform highlight the need for a more responsive and supportive policy framework that can adapt to the evolving needs of buyers and sellers alike.

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Investment Insights

Despite the current market challenges, there are still valuable investment opportunities. The ongoing economic and political uncertainty, coupled with fluctuating mortgage rates, suggests that potential buyers should carefully consider their options and seek expert advice.

Tip of the Week: Focus on properties with unique selling points, such as prime locations, modern amenities, or potential for value appreciation. These factors can enhance both rental and resale value, ensuring a sound investment in the long term.

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