Yeah, after losing 50% of FTBs in the recession, the good news is they are now back in full force! NAEA’s latest data shows that in February 30% of homes were bought by people for their first purchase. According to the trade body, this is even higher than September 2014, which is a good result when we expected sales to slow in 2015.
And the big question is will the slowdown in property sales and prices predicted really happen? Next month we’ll be doing our first forecast update for the year, but currently nearly half of agents think the market will continue to slow until the after the election.
This is likely as what buyers don’t like is uncertainty. A huge amount of the market’s success relies on sentiment and confidence. The idea of a general election which leads to England being run by several parties rather than one or two isn’t a conducive environment to commit your hard earned savings to the biggest purchase of your life.
However, the NAEA’s property update does suggest buyers are still signing up, with 366 house hunter’s registered for each branch. In contrast, the number of properties committed to sale were just 44, suggesting demand continues to outstrip supply, which in turn means getting ‘good deals’ is more difficult and that choice for buyers will be limited.
On average, each brand managed around eight sales per month, which despite the fluctuation in buyers and sellers, means the market remains fairly steady.
*But this also means that the changes in stamp duty haven’t really affected the market at all. Prices as some predicted haven’t increased that much, nor has it led to a huge number of people putting their property up for sale to trade down, or rush into buying with the tax burden lifted. So the change in stamp duty may just end up being a generous tax ‘giveaway’, albeit it does make the system a lot fairer.
*Update: As of November 2018, first-time buyers will pay no stamp duty on properties costing up to £300,000 and for properties costing up to £500,000 no stump duty will be payable on the first £300,000.
Who will agents vote for?
According to the NAEA, “two fifths (45%) of agents think that the Conservatives’ pledge to build 200,000 more homes will have the best impact on the housing market.”. This is interesting because it’s actually a pledge from Labour. The Conservatives are pledging to sell 200,000 to first time buyers under 40 years old at a 20% discount - adding to the Help to Buy new build 20% discount scheme, Rent to Buy and other schemes available.
Read - First Time Buyers Boost for Nottinghamshire and the East Midlands
And, not surprisingly, “57% of agents think Labour’s proposed Mansion Tax will have a negative impact on the housing market.” Bizarrely though this could end up helping buyers in the £2million bracket by holding prices back under this limit!
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Finally if you want to know the impact on the property market of the budget read my budget analysis.
