House hunters in December 2014 at their highest level for a decade
- Credit: PA Archive/Press Association Images
Stamp duty changes helped to boost the number of house hunters in December to the highest levels seen for that time of the year in a decade, estate agents have reported.
In signs that the housing market could be set for an early flurry of activity in 2015, the National Association of Estate Agents (NAEA) found that its members typically had 360 prospective home buyers registered with them per branch in December, marking the highest figure recorded for that month since 2004.
It said that the unusually high figure for that time of year suggests that the overhaul of stamp duty which was announced by the Government in early December has already encouraged more would-be buyers in what would normally be a quieter month for the housing market.
The findings add to evidence of growing interest from house hunters. Property search website Rightmove recently reported having more than 52 million page views on Sunday, January 11, marking a new record for the website.
The reforms to stamp duty mean that it now works in a more similar way to income tax - resulting in a reduction in the duty for 98% of people in the UK who pay it.
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Previously, stamp duty had been imposed on the total value of the property, so someone buying a home for between £250,000 and £500,000 paid between £7,500 and £15,000.
Under the new system, instead of paying tax at a single rate on the entire property price, buyers only pay tax on the part of the property price that falls within each tax band.
The radical shake-up means that someone buying a family home with a typical price tag of £275,000 will save £4,500 compared with the previous rules, although those buying very high-end properties will see their bills increase. The tipping point, where the tax starts to become more expensive than it was before, comes when homes are worth upwards of £937,500.
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The NAEA said its members have seen some “positive movement” in sales of properties in middle price brackets.
Nearly one fifth of NAEA members (19%) said that they had seen an increase of sales of properties worth between £251,000 to £925,000, while one in nine (11%) saw an increase in sales of properties with a value of up to £250,000.
Mark Hayward, managing director of the NAEA, said: “Reforms to stamp duty was one change that NAEA members predicted would influence the market this year, and from our latest housing market survey it seems that we are starting to see the initial impact of these changes.
“December is typically a quieter month for the property market however it would seem prospective home buyers have been left feeling encouraged, while agents have also reported activity in the middle price mark picking up.”
However, the NAEA said that the supply of homes for sale remains tight, giving prospective buyers a lack of choice. The number of houses available per NAEA branch was 45 on average, down from 50 the previous month and 47 in December 2013.
The lack of supply saw NAEA members’ record on average just five sales per branch in December compared to eight the previous month.
Some other recent reports have cautioned that a lack of choice of properties on the market could result in buyers seeing prices quite quickly ramped up in areas which are particularly desirable and popular.
Mr Hayward added: “While demand is particularly high at present, owning to the recent changes, the process of putting a house on the market for sale takes a little longer, and so the fact that we have not seen supply immediately increase following the reforms is not really surprising.
“Typically, a lull in activity is expected for this time of year, so the seasonally high level of demand is unusual in itself.
“This is just the start of the changes to the market - we would hope to see the new reforms eventually balance the see-saw of supply and demand.”
Yesterday, the British Bankers’ Association (BBA) reported that the number of mortgage approvals made to home buyers fell to a 20-month low in December.
But the BBA said it expected to see activity pick up once more in 2015, helped by some “great” mortgage deals currently being offered. Many lenders are currently offering some of the lowest mortgage rates they have ever launched.