In February, the UK housing market showed improvements across supply, demand and sales with First Time Buyer levels remaining stable as the FTB Stamp Duty Holiday neared its end.
Demand for property returned close to levels recorded in December 2011 with 293 house hunters registering with an NAEA agent, compared with 260 in January. This compares favourably with year-on- year figures, when in February 2011 just 268 people signed up with a member agent.
The increase in house-hunter activity impacted positively on the number of sales made at NAEA branches throughout the country, rising for a second consecutive month. An average of 7 sales was recorded in February compared with 6 in January, which member agents anecdotally attribute to more realistic pricing by sellers.
The NAEA believes the ‘slab’ structure of Stamp Duty is unfair for homeowners and that it discourages house-hunters from making a purchase on a property. As cuh, it’s possible that the rise in Stamp Duty land tax to 7 per cent for properties over £2 million, announced in the Chancellor’s recent Budget, may cause a slight weakening in sales throughout 2012.
The level of available housing stock also rose during February with the number of sellers placing their homes on the market moving from an average of 60 per branch to 63. However this is considerably lower than the 70 recorded a year ago. Encouragingly, the FTB market held at 23 per cent of overall sales during February, consistent with January.
NAEA agents report that house-hunters searching for their first property continued to make the most of the Stamp Duty holiday for FTBs on homes priced under £250,000. The fact that this important tax exemption has now come to an end creates another obstacle for homeownership in this important part of the market.
NUMBER OF HOUSE-HUNTERS
The average number of house-hunters registered per branch increased from 260 in January to 293 in February. Demand increased in February, returning to levels recorded in December 2011 (294). Year-on-year, this figure is above average (February 2011; 268). This increase in demand could well be attributed to the imminent ending of the Stamp Duty holiday as FTBs attempted to make the most of the tax saving.
SALES PER BRANCH
The number of sales agreed per branch increased from an average of 6 in January to 7 in February. Sales figures increased for a second consecutive month although this figure is slightly down on data recorded in February 2011 when an average of 8 sales was made per branch. It remains to be seen if this figure can be sustained given the recent ending of Stamp Duty exemption for FTBs and the rise in this tax to 7 per cent for properties over £2 million.
HOUSING STOCK
The average number of properties available for sale per branch increased from 60 in January to 63 in February. Supply increased slightly during February. Anecdotally, NAEA agents from around the country report that more realistic pricing from sellers is prompting speedy completions of property transactions.
FIRST TIME BUYERS
The percentage of FTBs remained stable with 23 per cent recorded in both January and February 2012. The percentage of sales to FTBs remained consistent with data recorded in January as those looking to get on the housing ladder attempted to make the most of the Stamp Duty holiday.
NAEA President Wendy Evans-Scott said:
“These latest figures show that there is demand for property, especially at the lower end of the market, which, if supported in the right way can lead to increases across supply and sales.
“It is a tragedy to see that the Stamp Duty exemption has now been removed. Not only that, but the Chancellor’s Budget announcement last week that a 7 per cent tax rate at the upper end of the market is to be introduced, hits house-hunters at both ends of the spectrum.
“The fragile housing market needs all the assistance it can get to generate sustained growth, but the Chancellor’s current policy will certainly dampen hopes of a rapid recovery.”
