The UK housing market showed improvements in demand for property with sales holding firm between February and March as FTBs continued to capitalise on the Stamp Duty Holiday which the Government brought to an end on the 24th March.
NAEA member agents reported that the number of house hunters increased to its highest level in five months with an average of 297 registering (October 2011; 305). Moreover, this figure is well above the number recorded in recent years. Evidence from NAEA member agents suggests that the incentive of escaping Stamp Duty by completing a house purchase before the end of the Stamp Duty holiday drove demand amongst FTBs during March.
The number of sales made to FTBs looking to get onto the UK housing ladder increased from an average of 23 per cent of the overall market share in February to 24 per cent in March. This change of one percentage point represents a record 10-month high for this part of the market (May 2011; 24 per cent). Sales held firm during last month with an average of 7 made per branch; the same as February.
This stability is likely to have been helped by the boost in interest from FTBs, and bodes well for the market’s ongoing stability. Supply levels reduced from an average 63 per branch in February to 61 per branch in March.
NUMBER OF HOUSE-HUNTERS
The average number of house-hunters registered per branch increased from 293 in February to 297 in March. Demand for property increased to its highest level for five months with 297 people registering at NAEA branches throughout the country (October 2011; 305).
Anecdotal evidence from agents suggests the majority of this interest came from the FTB market, motivated by the Stamp Duty Holiday, which was terminated by the Government in March.
SALES PER BRANCH
The number of sales agreed in March remained the same as in February, with an average 7 per branch. Sales were stable during March, buoyed by the increased interest in property from the crucial FTB market. It remains to be seen what effect the new Stamp Duty increase on properties over £2m and termination of the Stamp Duty Holiday will have on overall sales levels.
HOUSING STOCK
The average number of properties available for sale per branch decreased slightly from 63 in February to 61 in March. Housing supply levels decreased slightly during March. NAEA agents reported that some sellers were in fact holding off from placing their property on the market until the full facts of the Budget were established.
In addition, changes by major lenders to limit the availability of their interest-only mortgage products during March have limited the number of new sellers coming to market.
FIRST TIME BUYERS
The percentage of FTBs increased slightly, from 23 per cent in February to 24 per cent in March.
The bulk of demand for property during March was driven by the termination of the Stamp Duty Holiday for properties under the £250,000 ceiling on March 24th 2012. Now that this important tax break for FTBs has been removed, NAEA agents are reporting that FTBs are turning to new-build property deals where some developers are now offering to cover the Stamp Duty fee.
Wendy Evans-Scott, President of the NAEA, said:
“As our member agents predicted, the termination of the Stamp Duty Holiday helped to fuel a last minute rush from people hoping to escape this tax on aspiration.
“It is clear that significant demand existed for this important tax break for those seeking to buy their first home. In light of these new figures, the Government’s decision to remove such vital financial support for what is an extremely fragile part of the housing market seems short-sighted.
“The slight drop in reported supply levels suggests some caution amongst sellers, who were waiting until the full facts of the Budget were established and how that might affect house prices. In addition, the recent move by some major lenders to severely limit the availability of interest-only mortgages is no doubt dampening the levels of supply in the market.”
