Autumn Property Update 201510th December 2015 4:18 pm Leave your thoughts
So this is my first property update starting with autumn; one of my favourite times of year, although, you’ll probably find me saying that every season. All have their own unique charm, don’t you think?
What’s been happening?
Has it been busy or not? I feel like I have been asking myself this question a lot over the last few months. Looking at the statistics for residential property transactions in England, in September 2015 there were 95,270 which is a rise from September last year when there were 91,170 recorded. In October this year the numbers rose again to 101,030 compared with 98,630 in October last year. Non-residential property transactions have also seen an increase in England in September and October this year compared with last year with 9,040 (in September) and 9,120 (in October) compared with 8,520 and 8,830 in the same months last year.
So this seems to be a definite increase in sales from last year and this is surely encouraging. I have heard, however, from reliable sources, that in Maidenhead and indeed the UK as a whole, demand is higher than supply at the moment certainly in respect of residential property. Apparently, in Maidenhead, there are 11 buyers for each property, if this is true then where are the buyers coming from? It could be first time buyers, although, I can’t imagine that in an area with property prices as high as ours that there are many first time buyers flooding the market. It must be investment buyers that are having a huge impact on supply and demand together with the lack of property owners wanting to sell. With demand being reportedly so much higher than supply, simple economics dictates that this is going to push prices up even higher.
What’s going to happen?
If we are to follow statistics from last year, residential property transactions in England fell this month, in November, rose slightly in December (for that all important Christmas rush) and then dropped in January and February by quite a large margin. These trends may follow again this year; however, there are surely more pertinent factors which will help us predict the coming months. Following on from the above comments regarding supply and demand, The Telegraph has recently published that “properties for sale in the UK has pushed supply down to its lowest level since the 1970s, according to Nationwide” and therefore they are urging developers to crack on with plans to build hundreds of thousands of new homes that are required. The current rate of construction activity is, apparently, “well below” the rate needed to keep up with population growth but can first time buyers even afford to buy? Even with the recent 5% deposit incentive, 5% of a lot is still a lot and perhaps, therefore, Maidenhead is not the place where first time buyers should be looking. So far as I am aware, it is likely that many, if not all, will require help from their parents or other relatives but what happens to those whose parents don’t have any spare cash? Well, at the same time as they are desperately trying to save for a deposit, house prices are rising and apparently, they have reached a record high of 6.1% in the last year. With supply and demand as it reportedly is, the rise in property prices and the difficulty for first time buyers, it is likely that even more investment buyers will be flocking to the market…or is it?
As many of you will have heard in the news over the last few days, buy to let landlords will pay a 3% surcharge on stamp duty. This will also apply to people buying second homes. These changes will apply to all purchases from April 2016 and therefore, in a mere few months, perhaps the number of buyers willing or able to buy will reduce and this will redress the balance between supply and demand. This may also bring down property prices meaning that first time buyers will have a better chance of getting onto the property ladder and people will be more likely to move.
Let’s have a look at the actual difference in stamp duty costs for two competing buyers, one who is a first time buyer and the other who is buying a second home to rent out (“investment buyer”). Basing the example on a purchase price of £400,000 the stamp duty for the first time buyer will be £10,000 compared with £22,000 for the investment buyer. This is certainly a big difference but how much will it influence supply and demand and property prices in Maidenhead and the UK on the whole? Well this remains to be seen, however, the money raised by this additional stamp duty will apparently be used to help home buyers, be used as government loans to help house builders build starter homes and also for other schemes to help people get onto the property ladder.
For more information or if you are buying or selling your home, please contact me by email firstname.lastname@example.org or give me a call on 01628 631 051.
The next property update will be published in February 2016 so, until then, I wish you all the best for the festive season.
This post was written by Colemans Solicitors LLP