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First-time buyers rushing to beat stamp duty deadline
The property market has picked up momentum as buyers look to beat the April deadline when stamp duty will rise, according to property site Rightmove (RMV.L).
Areas of England which are set to be more affected by the stamp duty changes are starting to show signs of first-time buyers trying to get ahead of the curve. Before the autumn budget, first-time buyer demand in London was 28% ahead of last year — now, it is 31% ahead, according to figures from Rightmove.
In the East of England, the trend has moved from 28%, to 32% ahead of the same period last year since the budget, and in the South East, first-time buyer demand has ticked up from 23% ahead of last year pre-budget, to 24% ahead post-budget.
In London, only 8% of homes for sale will be stamp-duty free for first-time buyers from April. It’s 24% in the South East, and 32% in the East of England.
From April 2025, stamp duty rates will revert to previous levels, with the “nil rate” band for first-time buyers reducing from £425,000 to £300,000. Stamp duty applies in England and Northern Ireland.
Rightmove said that, across Britain, it currently takes five months on average to complete a property transaction after agreeing a sale, so first-time buyers would need to be particularly swift to complete purchases before the 1 April stamp duty changes.
Tim Bannister, Rightmove’s property expert said: “With stamp duty thresholds in England lowering from April, we’re seeing early signs of first-time buyers reacting.
“In London and higher-priced areas, where first-time buyers are most likely to be affected, we’re seeing some pull forward their plans to try and avoid higher charges.
“In most other areas of England, which have a greater availability of stamp duty-free homes for first-time buyers, we’re seeing the opposite trend of some first-time buyers taking a pause for breath.”
Demand was measured by the volume of inquiries being sent through the website to estate agents.
Toby Leek, NAEA Propertymark president, said: "With stamp duty increases due from April 2025 in England and Northern Ireland, we expect movers to be pushing through and completing on their home purchases in order to save, in some cases, thousands of pounds as they move into the New Year.”
Meanwhile, Halifax has published an analysis suggesting that among buyers generally, buying a home has become slightly more affordable relative to income, with the average house price-to-earnings ratio easing to 6.55, down from 6.62 last year.
Wage growth outpacing house price inflation was behind the improvement in affordability.
The average house price-to-earnings ratio has been steadily reducing since it reached a peak of 7.24 in the summer of 2022, Halifax said.
The analysis, using data from the Halifax house price index, found UK house prices have increased by 3.8% compared with a year ago, reaching an average of £292,508.
Meanwhile, annual earnings for full-time workers climbed by 5% to an average of £44,667, over the same period, Halifax said.
Amanda Bryden, head of Halifax Mortgages, said: “Housing affordability has improved over the past year, thanks to stabilising property prices, strong wage growth, and easing interest rates.
“That’s great news for first-time buyers and existing homeowners looking to remortgage or move up the property ladder.
Despite the overall trend, Halifax said that house prices in some parts of the UK have become less affordable than a year ago, with Northern Ireland experiencing the biggest increase in the house price-to-earnings ratio from 4.88 last year to 5.09.
This has been driven by a substantial 10% rise in house prices, Halifax said.
In England, the North West, South East and Yorkshire & Humberside also saw an increase in their house price to earnings ratios, meaning homes have become less affordable in these areas relative to income.
Although London still boasts the highest average house price of £539,238, its house price to earnings ratio of 8.22 is lower than the South East — which is the highest (or least affordable) of all regions at 8.96 (up slightly from 8.95 last year).
Conversely, the North East of England is the most affordable region, with a house price to earnings ratio of 4.38. This is down from 4.56 last year, meaning that homes in the area have become more affordable. This is because house prices in the North East rose by 2.4% and were outpaced by a 7% increase in average income for the area.
Karen Noye, mortgage expert at Quilte, said: "The Halifax Affordability Review lays bare the challenges facing the UK housing market. Our calculations based on the figures show that the difference of just one year in terms of the mortgage rates on offer could saddle homeowners with an additional £20,000 in interest over the life of a 30-year loan."
At a local level, Hull in Yorkshire was identified by Halifax as the most affordable area of the UK, with an average house price-to-earnings ratio of 3.15.
This is followed by Burnley and Blackpool in Lancashire, with ratios of 3.20 and 3.34 respectively.
Elmbridge in Surrey was identified as the least affordable local area, with a house price-to-earnings ratio of 17.54. St Albans in Hertfordshire was ranked second with a ratio of 13.96, followed by Kensington and Chelsea in London at 13.93.