House price growth weakens whilst Stamp Duty is slashed for ‘98% of people’

Stamp DutyHouse prices rose by 0.4% in November, taking house price growth over the preceding 12 months to 8.2% as consumers continue to display a reluctance to engage in the market.

According to Halifax, the average UK property is being marketed for £186,94, and though this figure is over 10,000 higher than that it was at the turn of 2014, house price growth has been on a steady decline since July.

Halifax’ findings follow the British Banking Association’s (BBA) recent assertion that mortgage approvals had plummeted by 16% over the course of 2014, and represent further ammunition for the already tightknit argument that the housing market has significantly dampened.

“The quarterly rate of increase has now declined for four consecutive months,” said housing economist Martin Ellis.

“Receding buyer interest combined with a revival in private housing completions has brought supply and demand into better balance. These factors have in turn contributed to the easing in house price growth since the summer.”

However, with lenders slashing their mortgage rates and a generally positive outlook for the growing wider economy, the signs are there for lending activity to become feverish once more.

Despite this, Halifax has forecasted evener house price growth over the course of 2015.

“We expect a further moderation in house price growth over the next year with prices nationally expected to increase in a range of between 3pc and 5pc in 2015,” Mr Ellis continued.

With an interest rate hike on the not-so-far horizon and greater consumer uncertainty that intrinsically accompanies an election year, demand could wane further.

Howard Archer, chief economist at Global Insight said of the Halifax’ findings: “With housing market activity appreciably off its early-2014 highs, we suspect house prices will generally rise at a much more sedate rate over the coming months, compared to the peak double-digit annual growth rates seen earlier this year.”

“It remains to be seen though just how much of a stimulative impact the chancellor’s reform of stamp duty has on stimulating housing market activity.”

Impact of Stamp Duty on House Buying

Nick Faith, the co-founder of Westminster Policy Institute said: “Stamp duty is one of the most hated taxes and is in desperate need of reform. It adds a significant cost to people looking to purchase a home and is especially harmful to first time buyers.

“However, it does raise approximately £13billion for the Treasury and at a time when money is tight this presents a huge economic challenge.”

In his last Autumn statement before the election, George Osborne took the bull by the horns announcing that stamp duty was to be revamped, with the old ‘slab system’ being abolished in favour of one which provides better value to the majority of homeowners, whilst charging those with houses worth over £1.5m or more.

Under the old system, house buyers who paid a penny over a ‘slab’ threshold would be subjected to a higher rate, but the new system is more reminiscent of the income tax system with the amount paid in duty reflective of the proportion of money paid over a threshold.

The Chancellor said that 91% of those living in the capital would save money, whilst 98% of people living in the wider UK.

Essentially, the changes to stamp duty signify Osborne’s intent to portray the government as fighting the corner of the layman, with an election just round the corner, you cannot blame him. However, that the changes made do provide prospective house buyers with a far more equal footing, the Coalition’s latest move is likely to be welcomed by the majority of consumers.

“Today I’m cutting stamp duty for millions of homebuyers in this country,” declared Mr Osborne.

“It is a fair, workable, lasting reform to the taxation of housing.”

 

Source; MoneyExpert

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Posted by: Leanne Halsey Categories: Economy, House Prices, Industry News, Property Market Tags: , , , , Comments Off on House price growth weakens whilst Stamp Duty is slashed for ‘98% of people’

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