The biggest boost the budget could provide to the property market would be to create the conditions for lower mortgage rates said Zoopla in it’s latest House Price Index ahead of the autumn budget on Wedensday.
The property portal’s latest data shows a 7% fall in home sales over the last four week compared with the same time last year. The number of homes for sale has risen 7%, offering more choice for buyers and increasing competition between sellers; echoing much of the sentiment shared in recent reports.
Zoopla said there was evidence demand remains but higher mortgage rates are making buyers more selective after it revealed buyers are selling just as quickly as last year, taking an average of 44 days nationally, with faster sales in more affordable areas.
But higher mortgage rates are putting pressure on sellers, with over a third of homes in areas where house prices are falling, up from 12% a year ago.
“The extra cost of mortgages has made home buyers more selective while greater choice of homes for sale has increased the scope to negotiate on price” explained Richard Donnell, Executive Director at Zoopla. “The impact is being felt by sellers in southern England where house price falls are most concentrated as average prices continue to rise across the rest of the country.
“There is still demand to buy homes, and those that are well priced and presented are selling just as quickly as last year. Getting the price right from the start is essential.”
Zoopla said it expected market activity to strengthen once mortgage rates start moving back below 5%.
It also called for changes to stamp duty by extending the 2% stamp duty band to £500,000, which would save home movers up to £7,500, with similar reforms for first-time buyers potentially saving up to £6,000 in up front costs.
Additionally, the proposed Your First Home scheme could stimulate demand for new homes by helping first-time buyers with limited deposits. Zoopla estimates that, with appropriately set local price caps, around a third of new homes could qualify, potentially supporting up to 30,000 purchases annually, equivalent to one in ten first time buyer purchases. Its success will depend on setting local price caps that reflect what buyers can afford and the prices of available new homes said the portal.
Concluded Donnell: “Changes to stamp duty could support buyers and sellers, particularly in southern England where transaction costs are highest. The Your First Home scheme is positive for the new homes industry and, if designed well, could stimulate demand and support wider housing market activity in 2027.”
One Response
Loser or lower?