Stamp Duty change well received, but key barriers to home ownership remain an issue
Released today, the latest BSA Property Tracker survey results reveal that:
- The Chancellor’s move to abolish Stamp Duty for first-time buyers has been well received, although Stamp Duty remains a relatively low-level concern for home buyers
- A greater proportion of consumers feel now is not a good time to buy property than feel it is a good time – for the third quarter in a row
- People are more concerned about potential risks to the housing market, including an increase in the cost of living and Brexit
Over half (55%[i]) of consumers think that the Budget’s Stamp Duty exemption[ii] will make properties more affordable for first-time buyers. Although the majority of first-time buyers now won’t have to pay any stamp duty, the move is expected to raise house prices[iii]. Property Tracker results consistently show that Stamp Duty is a relatively small barrier to property purchase (selected by 10%), and that raising a deposit remains a considerably more significant barrier (chosen by 69%).
When asked whether now is a good time to buy, more people disagreed (30%) than agreed (24%) – this trend remains largely unchanged for the past three quarters. Many people have concerns about the housing market over the coming year. These concerns are no different from the concerns raised last year, but people are now more worried about them. For example, last year 38% of consumers thought the rising cost of living posed a risk to the stability of the UK housing market, this year almost half (47%) think this is true. Similarly, last year almost a third (32%) of consumers saw Brexit as a threat to the housing market, whereas now 40% think that it is.
Andrew Gall, Chief Economist at the BSA comments:
“It is positive to see that the Government is taking action to make the journey to home ownership easier for many people. Consumers clearly agree – 55% feel that the Stamp Duty exemption will make properties more affordable for first-time buyers. However, Stamp Duty remains a relatively small barrier to home ownership – and it has not been a top-four barrier in Property Tracker’s nine-year history.
“Raising a deposit is however the greatest challenge: in December 69% of consumers said that raising a deposit was the biggest barrier – virtually unchanged from September, even in light of the Stamp Duty relief.
“Part of the difficulty in raising a deposit is the squeeze on household incomes due to inflation from the past fall in the value in the pound. The higher cost of living, together with the uncertain economic outlook amid Brexit negotiations, are dimming sentiment in the housing market. More people disagree that now is a good time to buy than agree – a trend which has remained for much of 2017.
“Together with the Stamp Duty exemption, the Budget included a package of measures aimed at getting to 300,000 additional homes a year into the market. The Property Tracker indicates that increasing the supply of housing is an important part of solving the affordability challenge in many parts of the country.”
You can view the full BSA Property Tracker report here.
[i] Those who said ‘don’t know’ were excluded when calculating the proportion who said the stamp duty land tax exemption for first-time buyers would make buying a home more or less affordable for first-time buyers.
[ii] The Autumn Budget 2017 abolished Stamp Duty for first-time buyers buying properties valued up to £300,000 – or for the first £300,000 of properties up to the value of £500,000
[iii] The Office for Budget Responsibility has predicted that house prices will be 0.3% higher
Kindly shared by Building Societies Association (BSA)