First-time buyers in the UK are currently able to purchase property up to the value of £250,000 without paying the standard 1% stamp duty, but this exemption comes to an end on March 24 after which they will become liable for stamp duty on any property costing more than £125,000.
In the past this would have promoted a stampede as buyers rushed to beat the deadline, resulting in price rises, but although sales did rise in January most surveyors reported house price falls. A 12% balance of members of the Royal Institution of Chartered Surveyors reported an increase in sales but this hasn’t resulted in higher prices. There was a majority of 16% of RICS members who reported price falls rather than increases, which is the same as December. This was slightly better-than-expected as economists had forecast a balance of 17%, and it’s thought the higher levels of activity may be down to the relatively mild winter before the recent cold snap.
The UK Chancellor, George Osborne, decided to reintroduce the stamp duty rates last November, after pointing out that the policy which was introduced in March 2010 by the previous government hadn’t really helped many people purchase a home. The resulting increase in first-time buyers during the last couple of months has improved optimism amongst surveyors, but the major difficulty for many would-be buyers is still obtaining a mortgage, and there is also a shortage of housing stock as those who don’t have to sell up are choosing to stay put in the hope prices will increase.
According to the government’s house price survey, UK house prices stagnated in 2011 and rose by just 0.1% taking the average price to £205,269 which is 5% less than the peak prices in April 2008. However prices varied considerably across the country, falling by 1.6% in Wales, by 4.6% in Scotland and by 8.1% in Northern Ireland. In contrast prices in London increased by 4.4% and by 0.5% across England.