Residential property – bright spots amongst Brexit uncertainties
In 2018 the UK housing market faced a variety of challenges including a shortage of homes on estate agents books, issues surrounding affordability, the inevitable uncertainty caused by Brexit and the prospect of interest rate rises.
However, UK house prices unexpectedly rose at the fastest monthly rate in almost two years in December, according to data produced by the Halifax. The average cost of a home rose by 2.2% compared with November.
First-time buyers making their move
Whilst the number of current owners moving home has slowed in recent months, the good news is that the number of first-timers getting on to the housing ladder has increased. Analysis by Lloyds Bank shows that 372,100 first-timers entered the market in 2018, up by 3% on the figure for 2017.
Stamp duty cuts and Help to Buy provide stimulus
Changes in stamp duty provided encouragement. First-time buyers in England and Northern Ireland now pay no stamp duty on properties worth up to £300,000. This means that they save up to £5,000. For properties costing up to £500,000 they pay no stamp duty on the first £300,000, but will pay duty on the remaining £200,000. (If they buy a property worth over £500,000, then they pay the standard rate and won’t qualify for first-time buyer’s relief).
As of October 2018, first-time buyers under Shared Ownership schemes can now claim First-Time Buyers Stamp Duty relief on homes worth up to £500,000. This change applies to homes purchased on or after 22nd November 2017. Those purchasers who chose to pay stamp duty in stages and were previously not eligible for the relief can now claim this tax back.
More and more first-time buyers have taken up the government’s Help to Buy equity loan scheme. Of the 48,000 purchases made under the scheme, 39,000 were first-timers.
Why this could be a good time to buy
As well as being able to take advantage of what has become a buyer’s market, first-time buyers can also benefit from historically-low interest rates on mortgages. The home loan market remains very competitive, and lenders are currently offering a range of attractive deals specifically designed to help young people find a home.
In the current market conditions, it’s worth checking out recent sold prices in the area you are looking to buy in, as you may be able to secure a property with an offer lower than the asking price, especially if the owners are keen to move as soon as possible.
What the future may hold
Although activity in the property market may be set to slow this year, experts aren’t predicting a property market crash. Cheaper properties certainly help new buyers and provide stimulus to the market.
Many predict that once there’s more certainty about Brexit, pent-up demand is likely to resurface and re-energise the market; after all, growing families will still want larger homes, people will move to take up new jobs, executors need to sell properties left in estates, and divorce and remarriage can often necessitate the buying and selling of homes.