Tick tock, tick tock. The 99.9% of you who are aware that it is now January 2018 (I do worry about the 0.01% of you) may also know that means we are just 14 months away from the completion of Brexit. Well, that’s the idea anyway.
Unfortunately the UK’s negotiating team and the EU’s representatives are yet to dot the I’s, cross the t’s, or even pen an agreement worthy of anyone’s time in more than a year’s worth of negotiations. It is deeply concerning that our elected politicians are unable to formulate useful discussions in such a lengthy amount of time.
When they’re not bungling the most important political process of the past five decades, the Conservative Party do occasionally come up with good ideas, and the latest one was revealed in their autumn budget: cutting stamp duty in an attempt to revitalise the flagging housing market and in doing so provide a pathway for first time buyers to get onto the property ladder.
That is the concept, anyway, and on paper it certainly seems like a wise move. As we know, property rises are increasing but disproportionately to the rise in the average wage – meaning that many young people simply cannot afford to buy their first home. That puts them on the rental market – most will know how nightmarish that can be, or begging at the door of the bank of mum and dad. Unfortunately, not everybody is in the position to ask cash-rich parents for a loan.
So the abolishment of stamp duty for first time buyers purchasing homes under the value of £300,000, and a reduction for those up to £500,000, was met with joy by potential buyers….but typical scepticism from others.
The Office for Budget Responsibility (OBR), which is an independent body I should add, claimed back in November that the removal of stamp duty would actually be counter-productive, with house prices rising as a result in many areas. As I will reveal later in this missive, the OBR were spot on with their claims.
At the time of his budget, Chancellor Phillip Hammond had claimed that the average first time buyer would save £1,700 as part of his scheme – correct, confirmed the OBR, but the tax break will likely push prices up by about 0.3% in 2018 alone.
“The main gainers from the policy are people who already own property, not the first-time buyers themselves,” their statement concluded.
And the latest findings from the Royal Institute of Chartered Surveyors further fuelled the claims that the abolition of stamp duty was something of a damp squib from the Tories.
No Net Gains
The RICS has compiled some key statistics in the immediate aftermath of the admittedly fairly recent stamp duty decision, and their findings suggest has had little or no impact upon the housing market.</p.
Some 90% of the surveyors questioned revealed they had not experienced increased demand from first time buyers in their catchment area, and 66% commented that they believed the abolishment or reduction in stamp duty fees would have no long-term impact upon the housing market as a whole.
The RICS’ chief economist, Simon Rubinsohn, said: “The initial feedback from the market doesn’t suggest that the change in the stamp duty regime announced in the budget is going to have a material impact on activity.
“Indeed, the risk was always that a good portion of the benefit would be capitalised in the price, therefore limiting the benefit for the first-time buyer.”
This is in no way linked to the stamp duty cuts as though took place in November, but 2017 was once again a year of property price increases.
It was the Midlands that experienced the most growth, according to the Office of National Statistics, with the average price hikes ranging from 7.2% in the West Midlands to 6.4% in the East.
Surprisingly, London saw the slowest growth in all of England’s regions, with properties in the capital climbing just 2.3% in value.
The overall, UK-wide picture is that house prices have increased by just over 5%, and now the average price of a property in the UK is £226,000.
When interviewed by The Guardian, the Halifax Community Bank’s managing director Russell Galley said: “While the quarterly and annual rates of house price growth have improved, they are lower than at the start of the year.
“UK house prices continue to be supported by an ongoing shortage of properties for sale and solid growth in full-time employment. However, increasing pressure on spending power and continuing affordability concerns may well dampen buyer demand.”