In the first of a series of columns for Marlborough News Online, estate agent Shona Ford examines the downturn in property sales since changes to stamp duty were introduced.
According to HMRC, the number of UK properties sold fell by 45 percent between March and April as changes to stamp duty, introduced on April 1, started to be felt by the property market.
This coincides with a recent report from the Halifax that house prices have reached their peak and that they expect prices to slow down further.
According to the building society, house price inflation in the year to May remained unchanged at 9.2 percent, which was the lowest rate since last autumn.
It further claimed that “affordability issues” might slow down the market further as 2016 progresses. This has been backed up by some economists who felt that house price inflation had peaked. According to the Halifax, the average price of a house in the UK is now £213,472.
One of the factors instrumental in rising prices has been the huge demand for properties at all levels. However, figures show that the number of properties sold in April is dramatically down from the record high of 164,400 transactions in March, illustrating the rush to buy properties before the higher rate of stamp duty on second homes came into effect.
Since then, landlords and buyers of second homes have had to pay three percent extra and, interestingly, the number of residential properties sold in April – 84,280 – was the lowest for three years and nationally down by 14.5 percent over the year, suggesting demand may be finally lessening. For investors, the new stamp duty has been a bit of a body blow, but you might imagine that for first time buyers it could be seen as a good thing.
Unfortunately, according to Rightmove, the huge surge in demand led to an equally huge national price increase of around six percent for properties with two bedrooms or fewer against a national increase of around 0.4 percent for all properties.
Local impact
Marlborough and the surrounding villages have not traditionally been big investor areas, with rental properties in this area tending to be homes of residents who want to return at some point, rather than the more commercial lettings of Swindon.
Therefore, the lack of investors here will not make such a big impact on the market as they might in London for example.
If, however, the drop of sold properties in the HMRC and less pressure on house prices were to indicate a general lack of demand in the system, this would probably make a big difference. Currently, the high demand in this part of Wiltshire shows no signs of letting up, although the market is taking stock as the Euro Referendum looms.
Whatever way the vote goes, people still need homes to live in, so once the initial reaction is over, we would expect the property market to continue with a modest, gentle upward trend.
However, if it were to be combined with a general lack of demand stemming from the new stamp duty changes, then property prices may be vulnerable.
Six months on, the stamp duty changes brought in last year are beginning to affect properties with price tags over £1 million, so April’s changes may not be felt until later in the year. It will have to be seen whether or not the vote makes London or overseas buyers reconsider their previously strong interest in this area.
If so, vendors may have to think more carefully about what strategy they use to sell their property to realise the highest price possible and be realistic about what that might be.
Selling strategies
A good estate agent should provide you with the full information about the market and your property’s place in it, to help you to decide how best to market what might be your most valuable asset.
Pricing, timing and presentation are all areas that you should discuss with your agent to determine the right course of action for your property and the following are only brief examples:
- Pricing: If you are thinking of selling, be careful of agents who have lots of properties where the price has been ‘reduced’.
- Timing: Consider issues such as upcoming Votes/Ballots and how they might affect the market
- Presentation: Make sure your house is looking its best with clean windows and sparkling mirrors.
Shona Ford is senior negotiator at Winkworth Marlborough