There is little doubt that housing demand has increased considerably over the past 18 – 24 months, a contributing factor being the strengthening of the UK economy, producing rising confidence and manifestly improved cost and availability of credit. Unfortunately, higher demand has not been matched by an increase in the number of sellers in the market, resulting in strong upward pressure on house prices in many parts of the UK including our own.
Researching statistical information over the past 6 months showed that in October 2014 there were just 74 properties available in BN5 and this figure, although it has fluctuated, remained the same in March of this year. In BN6 (covering a significantly larger area of housing) there were just 143 properties available for sale as opposed to 169 back in October of 2014, showing a 25% decrease in stock levels. These figures are historically low and certainly ringing alarm bells within the industry, as we would have expected that the ‘feel good’ factor in the upward trend in pay, coupled with easier access to mortgage funds, would have fuelled considerably more growth in our local markets. However, we do still seem to be experiencing a lack of confidence in clients wanting to go straight to the market following valuation.
As agents that have seen trends over the past 25 – 30 years, some of us at Richwards can remember the heady days of the late 1980s when most agencies couldn’t prepare sales particulars fast enough to keep up with the high numbers entering and selling within the market. These were indeed the days of the ‘boom-bust’ economy and 2 very significant recessions later there is a far more cautious consumer, more careful with investment, more interested in the small print and generally less likely to move on a whim. However, we cannot dispute that over a life time, bricks and mortar is still a very sound investment and for the vast majority is their biggest asset….’An Englishman’s Home Is His Castle’!
The Halifax predicted last November that house price growth throughout 2015 is likely to be in the range 3 – 5%. Where is a similar level available readily for savers? Yes, we do have a General Election on our doorstep now, but it is very hard to see what major changes any party would make to the property market, the only ‘blot on the landscape’ being the much feared Mansion Tax, which the Labour Government are trumpeting as being a logical solution to help fund the NHS. There is still a great deal of discussion regarding this as to whether it will be a certainty.
For our own local markets here in West Sussex however, the change in Stamp Duty charges last December has largely been one of positivity for the normal domestic market, as the thresholds now are stepped with only the higher amounts being paid at the higher rate. The most bitter of pills to swallow previously was the threshold of £250,000 whereupon the rate went to 3% of the total at £250,001. Here are the new rates clarified with an example of a purchase at £275,000.
Purchase price of property
Rate of SDLT
Up to £125,000 = Zero
Over £125,000 to £250,000 = 2%
Over £250,000 to £925,000 = 5%
Over £925,000 to £1.5 million = 10%
Over £1.5 million = 12%
If a buyer exchanges contracts for the purchase of a house for £275,000 under the new rules, SDLT is now calculated as follows:
0% on the first £125,000 = £0
2% on the next £125,000 = £2,500
5% on the final £25,000 = £1,250
Total SDLT payable = £3,750
Prior to the changes, the tax would have been payable at a flat rate of 3% in the above example, giving a tax bill of £8250
We would maintain, along with our many colleagues in the industry, that if you would like to move home, it is not a bad time to do it and if sellers are prepared to ‘take the plunge’ and go straight to the market, it will put one in a better position to negotiate on a suitable purchase. If everyone can be more like minded we will also see property stock levels rise giving wider choice to everyone including first time buyers.