Market conditions have normalised over recent weeks and there remains relatively healthy levels of activity in many parts of the UK. The supply of property for sale increased by 16% in the first week of September. After sustained price falls in parts of London there are signs of renewed buyer activity at the upper end, with a 6% rise in the number of sales agreed for homes of £750,000 and over compared to the same month last year according to Rightmove.
Average asking prices marginally increased by 0.7% in September after two consecutive months of falls. Despite this increase, the market nonetheless remains price sensitive and constrained by affordability.
Time to sell?
So far this year, properties have taken an average of two months to sell. Key factors affecting the time to agree a deal include price, location, condition and time of year. Despite challenging market conditions in many areas, nationally this figure is just one day longer than last year and is 10 days shorter than 4 years ago.
There are of course regional differences. Properties are selling fastest across the Midlands – 49 days in the West Midlands and 54 in the East Midlands, while properties across London and the North East are taking anything up to 72 days to sell on average.
Stamp Duty revenue
New data published last month shows that the Treasury has netted close to £9.3 billion in Stamp Duty Land Tax receipts on 1.1 million residential transactions across the UK in 2017 to 2018.
While sales volumes rose by just 1% over this last year, residential tax receipts rose by 8%. The mean amount of Stamp Duty paid per residential transaction was £8,700.
Over a quarter of a million properties were purchased as additional dwellings in 2017 to 2018, up 9% year on year, and these accounted for 44% of all residential Stamp Duty receipts. The 3% element alone has netted the government just shy of £1.9 billion.
Although sales volumes across London, the South East and the East of England are lower, residential stamp duty intake in all regions increased. London accounts for 39% of all residential Stamp Duty receipts, with Westminster and the Royal Borough of Kensington and Chelsea contributing just over £1 billion between them.
On the 29th October the Chancellor, Philip Hammond, will announce the government’s Autumn Budget. Housing is once again expected to feature extensively as part of a wider political agenda and rumours are circulating about possible tax changes. The Chancellor will deliver the Prime Minister’s recent commitment to £20 billion of additional NHS funding.
Despite a fall in stamp duty revenues it looks unlikely that there will be any reversal in the higher rates previously introduced. Ahead of the Budget, the Prime Minister has announced plans to introduce an additional 3% levy, over and above all other charges, on UK property purchases by foreign buyers. This charge would apply to both individual and corporate buyers if they are not registered to pay tax in the UK. Currently 44% of all UK foreign owned real estate is located within Greater London and, if implemented, this policy is likely to become a further headwind for the already fragile London market.
Autumn market trends
It is likely that the uncertainty caused by protracted Brexit negotiations will remain a drag on the property market until there is clarity on the terms of Britain’s exit from the European Union.
Markets do not respond well to uncertainty and this is considered one of the underlying reasons why latest data from the RICS shows the number of homes for sale in 2018 is lower than at any point in the past decade. It is clear that low supply is propping up, rather than powering prices.
However, across Garrington’s operating regions we are seeing that, after two years of being in limbo, the property market has built up a good dose of pent-up buyer demand. The friction between that demand and chronically short supply is driving up prices in areas previously seen as undervalued. Numbers remain modest compared to long term trends, but we are continuing to see a steady flow of cautious buyers concluding that they should be progressing their purchasing plans this autumn.
We hope you found this edition of our Market Review helpful. If you would like to discuss your own property requirements, please get in touch with one of our experienced property finders.