Tax uncertainty keeps would-be movers on the sidelines
Higher property listings in southern England — up 8% to 15% year-on-year — have coincided with a fall in prices in October after months of uncertainty around housing policy.
Zoopla reported that London and the South recorded their first decline in 18 months while many households waited to see what the Budget would bring.
Rightmove data showed a similar trend, with the number of homes for sale in the South 9% higher than a year ago compared with 2% elsewhere. The portal also reported it now takes about five days longer to find a buyer in the South than in the North and Wales.
Stamp duty thresholds remained unchanged in the Budget. The tax bands for main residence purchases in England and Northern Ireland were last set in 2014. Zoopla said house prices have since risen 47%, pulling more buyers into paying stamp duty and increasing the share of the purchase price paid in tax. More than 90% of existing homeowners in southern England and the Midlands now pay stamp duty. Buyers of average-priced homes are paying £9,500 in Aldershot, equivalent to 2.5%, and £10,650 in Crawley, equivalent to 2.6%. Zoopla said the case for abolition of stamp duty as part of wider tax changes remains strong.
Affordability pressures also remain concentrated in the South. Median house prices are around 10 times median earnings in the South East and 11 times in London, compared with six times in the North West and five times in the North East. The Office for National Statistics defines affordability near five times earnings.
David Powell, chief executive of Andrews Estate Agents, said house price growth in the South may stay static in the short term while the market adjusts.
Rightmove said housing stock on the market has reached a decade-high level, with higher levels in the South. It described a buyers’ market in which sellers are moderating price expectations. Nathan Emerson, chief executive of Propertymark, said affordability challenges, property choice and the impact of stamp duty changes are weighing on confidence.
Outside the South, values continued to rise. Zoopla reported annual growth of 2.9% in the North West and 2.3% in the North East in October. Liverpool recorded a 3.3% increase year-on-year. Belfast saw a 7.8% rise to £195,500. Manchester and Newcastle prices rose 2.4% to £234,500 and £160,900 respectively.
Following the Budget, Nationwide and Virgin Money announced reductions of up to 0.19% on selected mortgage rates. Zoopla said underlying demand to move home remains in place and expects housing activity to return into the new year.
