End of stamp duty holiday encourages first time buyers

Tuesday 14th February 2012

House sales edged up slightly during January as an increased number of first time buyers looked to beat the stamp duty holiday, which expires in March, according to the latest RICS UK Housing Market survey.

Since the beginning of the year 12% more surveyors across the UK reported rises rather than falls in newly agreed sales.

From 24th March, first time buyers will no longer be exempt from stamp duty on properties under £250,000 and some surveyors note this has produced an increase in activity at the lower end of the market. In light of this, respondents were optimistic about prospects in the near term, the strongest since May 2010.

In spite of this relative optimism, prices across much of the country continued to drop, albeit moderately, with 16 per cent more surveyors reporting price falls rather than rises.

Across the UK, London once again saw the strongest reading in terms of prices, while the West Midlands and Wales saw the biggest falls, with surveyors reporting net balance readings of minus 54 and minus 41 respectively. 

Despite a relative upturn in interest from some first time buyers prior to the end of the stamp duty holiday, surveyors report that lack of affordable mortgage finance continues to hold back the market. 

Looking ahead, while a cautious optimism surrounds future transaction levels, the same cannot be said for future prices. A net balance of 15% more surveyors expect prices to continue falling over the next three months.

"With first time buyers no longer exempt from stamp duty as of the end of March, it seems that some are looking to purchase homes before the deadline and, as a result, surveyors are relatively optimistic for the coming months,” said Michael Newey, housing spokesperson for the RICS.

“However, many problems with the market still exist and the lack of affordable mortgage finance is still preventing many from getting onto the property ladder.

“Prices are still falling across most parts of the country, but expectations for future prices have become less pessimistic.”

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