U.K. property price has broken the £200k barrier
The latest house price index from mortgage lender Nationwide shows the average U.K. property price has broken the £200k barrier for the first time since records began. While to some of you a further increase in house prices might not have been expected, particularly as economic uncertainty abounds ahead of the in-out European Union vote and as the global economy is not as strong as it was, many investors have had a different issue in minds – the newly minted stamp duty tax rules for owners of more than one home.
Following the Chancellor of the Exchequer’s budget announcement that owners of more than one home would be subject to higher stamp duty charges from April this year, the property market has become busier. Nationwide’s chief economist Robert Gardner explains in the latest house price index press release that it’s investors who are -in part at least – to blame for the increased activity and prices.
“There has been a pickup in housing market activity in recent months, with the number of housing transactions and mortgage approvals rising strongly,” said Nationwide’s chief economist Robert Gardner in a press release. “This is likely to have been driven, at least in part, by upcoming changes to stamp duty on second homes, where buyers have brought forward purchases in order to avoid the additional tax liabilities.”
That comment accompanied Nationwide’s index which reported the average purchase price of a home in the U.K. hit £200,251 in March, marking an 0.8% increase from February and a 5.7% gain from March 2015.
Now those new tax rules are in place whereby owners of more than one property are subject to higher stamp duty tax payments as well as exempt from tax breaks afforded investors into stocks and shares, you might think the rate of house price growth could begin to slow. But, according to another well-known lender, that’s looking highly unlikely.
Halifax, who published its own house price index for March in early April said house prices – according to the mortgages it has approved – had risen 2.6% higher from February and were an eye-popping 10.1% higher than a year earlier.
Despite the new tax rules now being in place, Martin Ellis, Halifax’s housing economist doesn’t expect any real slowdown in price momentum over the coming months.
“Current market conditions, however, remain very tight with an acute supply/demand imbalance continuing despite an improvement in the number of properties coming on to the market for sale in recent months,” Martin Ellis said in the Halifax press release. “This, together with continuing low interest rates and a healthy labour market, indicate that house price growth is set to remain robust.”
So, while prices continue to rise and estate agents are advising their clients to ask for ever higher amounts, it might be worth your while trying your local property auction room. Aside from the transparency and the promise of a deal on the day, there is always the chance you could find a hidden gem or a real bargain that will help grow your existing portfolio or be the start of a new career. While you won’t be able to avoid the additional stamp duty costs, you will be able to do business quickly and in an open forum.