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Number of buyers boosted in December by stamp duty changes

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Buyers increase due to stamp duty reforms

According to the National Association of Estate Agents (NAEA) the number of buyers that registered with estate agents in December was the highest in 10 years. According to figures released the average estate agent registered 360 new applicants. This is a big increase and numbers have not been at this level for since 2004. The reason for the jump in buyer numbers has been put down to the stamp duty changes that were announced just over 8 weeks ago.

Under the old stamp duty regime anybody buying a property up to the £250,000 threshold was charged 2% of the purchase price. If the purchase Price was between £250,001 the stamp duty levy would increase to 3% of the purchase price. Under the old system the buyer would pay stamp duty on the whole amount of the purchase price which for somebody buying a flat for £260,000 would have to fork out £££. This is a sizeable sum and had to be paid before you had even walked through your front door.

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Buyers are saving thousands which is pushing up prices

Now that the stamp duty has been reformed there is not a £250,000 cliff edge and buyers are no longer charged 3% if the buy a home between £250,000 and £925,000. It is for this reason that agents have seen buyer numbers rocket in December as buyers look to increase the amounts they are prepared to spend on a home. The problem is that there is still not enough homes for these buyers and there is likely to be a spike in house prices in the short-term. The boost in numbers has been welcomed by estate agents who have seen the market slow considerably over the autumn. The market has been affected by the new mortgage rules that was introduced by the Bank of England towards the end of the summer last year.

The welcome boost has already seen the price of some asking prices going up particularly in the middle market that is going to benefit fro the stamp duty savings. The stamp duty changes will certainly make buying a hoe cheaper for buyers but vendors are already taking advantage and putting their homes up at increased prices. Whilst the number of buyers has increased the number of completions is still well below the levels of pre 2007. The market has changed beyond anybody’s expectations over the last decade and this is borne out by the fact that only 1one in ten buyers between 16-24 years can now afford to buy their own home. This compares to one in three during the 80’s and 90’s.

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Asking Prices Already Start To Rise In 2015

Early reports from estate agents and building societies suggest that the property market has already started with a bang as homeowners already start to hike their asking price and the number of buyers starts to pick up again. Estate agents are already suggesting that 2015 could be a bumper year with buyers handed a nice Christmas present by the Chancellor. Stamp duty was reduced for nearly everybody except for buyers looking to spend over 935,000. This has has the effect of buyers increasing their price ranges which has resulted in homeowners pushing up their asking prices.

There was a lull in the housing market in The autumn as buyers came to terms with the Bank of England's tightening up of the mortgage market which has made it considerably harder for buyers to get a loan. Buyers were also hoping that this prices would come down a little which they duly did particularly across London and the south-east. However the juggernaut property market has slipped back into gear again very early partly as a result of the changes in the stamp duty land tax.

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Asking prices have increased by 1.4% since January

Property coming onto the market in January is already up by 1.4% or £3,798 compared to December and there are signs that this may continue until a month before the general election in May. House prices across England and Wales are 8% higher than a year ago. The average house price across England and Wales now stands at £273,500. There has been some signs that buyers who were holding off towards the end of last year are trying to get in early before the market takes off again. Rightmove said that their website has already received 10% more visitors this month compared to January last year and that first time buyers were trying to buy their first home which is 10% higher than it was 12 months ago.

The average price of a home for first time buyers now stands at £163,250 but there is a strong possibility that the recent changes to stamp duty will encourage more first time buyers to come into the market. This is
expected to push prices up further. According to experts first time buyers are really making a big saving because the changes to stamp duty will save them on average a figure of around £1250. This is coupled with the fact that the price of a first time buyer property is still down slightly on December by around £1100 which means that first time buyers looking too buy a home in January could potentially be saving circa £2,350 which may not sound like a lot of money but cast your mind back to when you bought your first home and it was and still is a tidy sum to pay towards your moving costs.

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A General election year normally has a negative impact on the market

In another sign that the property market is showing signs of an early pick up the number of page views on Rightmove's website was more than 52 million which is the largest number of page views on record for the Rightmove website. Unfortunately this is not all good news as there are still not enough homes coming onto the market with agents reporting low stock in popular areas. This will only push up house prices in the short term as buyers start to out bid each other again. Experts are keen to sound a note of caution as the market will start to quiten down before the election which is traditionally a quiet time in the housing market. It is possible that we may see some of these early gains reversed as sellers struggle to sell.

 

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