Annual house price growth stable in the UK is stable at 2.5%, up just 0.1% in November to an average of 209,988, according to the latest national index.
Robert Gardner, Nationwide’s chief economist, pointed out that annual growth remains within the 2% 4% range that has prevailed since March and he explained that the current lack of homes on the market is providing support to house prices.
He believes that the decision in the Budget to abolish stamp duty for first time buyers purchasing a property up to £300,000, with relief for those purchasing a property up to £500,000, is likely to have only a modest impact on overall demand.
He explained that in many regions, first time buyers already paid little or no stamp duty as the price of the typical first time buyer property was below the previous threshold of £125,000. The potential savings are more substantial for borrowers where house prices are higher, especially in London and the South East.
Calculations from the lender show that before the change the average stamp duty paid by a first time buyer in London was £13,102 and that now drops to £9778. In the South East it falls from £5,166 to 2,166, in the South West it is down from £2,399 to £531.
In East Anglia the average tax paid would have been £2,488 but is now £744, in the West Midlands it is down from £1,352 to £279, in East Midlands it is down from £1,172 to £178 and in the North West it is down from £1,038 to £234.
Elsewhere the difference is much smaller. In Yorkshire and Humberside the average stamp duty for first time buyers is down from £854 to £154, in Wales it is down from £750 to £93 and in the North it is down from £639 to £100.
Gardner believes that the focus on boosting house building in the Budget is important, as a shortage of homes is a key reason why affordability is so stretched in large parts of the country.
‘Seeing a steady house price growth of 2.5% year on year is positive for the current property market. Whilst house prices grow at a sustainable rate slightly ahead of inflation, we can rest easy knowing that they are not reaching the dizzy heights of the last decade that saw a correction of prices in 200,’ said Graham Davidson, managing director of buy to let specialist, Sequre Property Investment.
‘London is suffering a slowdown as a result of previous double digit growth due to prices previously moving too quickly, too fast. As a result, buy to let investors are turning their attention to areas of the north, such as Manchester, Liverpool and Sheffield where increases have been much steadier and therefore sustainable. These cities and their commutable surroundings are likely to continue to thrive within the current housing market, making them the ideal hotspots for investment,’ he added.
