Rightmove: Asking price growth slows ahead of Stamp Duty changes

Asking price growth was lower than usual at the start of February as the property market was hit with the reality of the impending Stamp Duty changes

The latest Rightmove House Price Index shows average asking prices rose by just 0.5% on a monthly basis in the first weeks of February.

That is below the typical 0.8% for this time of year.

The portal said sellers and agents appear to be adjusting pricing expectations as anyone starting the buying process now will face higher Stamp Duty bills if they fail to complete before the end of March.

The number of available homes for sale is at a 10-year high, moderating the New Year price surge, Rightmove said.

The number of new sellers coming to market is up 13% annually, while buyer demand is 8% ahead, and sales agreed numbers are up by 15%

But the property website’s analysis showed there are more than 550,000 homes sold yet awaiting legal completion, 25% more than at this time last year and many may miss the deadline.

First-time buyer purchases between £500,001 and £625,000 are most affected, with an extra £11,250 at risk for this group if the deadline is missed, Rightmove said.

It comes after January asking price growth was at a five-year high.

Colleen Babcock, property expert at Rightmove, said:

“New sellers are showing some pricing restraint after a fast start to the year, being mindful of both the high level of seller competition, and in England also of the looming Stamp Duty deadline and extra costs for some buyers.

“Agents report that some of the steam is coming out of new sellers’ price expectations to fit the changing market conditions, which is a sensible reaction to attract buyer interest, and it will also help to support activity levels. The upcoming Stamp Duty deadline in England remains a key talking point, and while some movers may not be affected at all, others will be more severely impacted.

“We’ve previously suggested reforms such as regional variations in Stamp Duty charges to try and address some of the inequities in the current system. With the predicted conveyancing log-jam likely to cause some buyers to miss the deadline and end up paying more tax through no fault of their own, it would seem justifiable for the Government to announce a short extension before the end of March.”

Babcock remains positive about the post-April property market.

She said: “Beyond the deadline, agents report that underlying market activity remains positive, and that they don’t expect a major drop-off in activity from April, as the financial impact on many movers is smaller than previous deadlines.”

Commenting on the report, Toby Leek, president of estate agent trade body NAEA Propertymark, said: “Many buyers will have been placed firmly in the driving seat when it comes to their next house purchase due to the time constraints placed on those needing to sell and buy their next home to beat the upcoming stamp duty rises.

“What we expect to see now is a potential slowing in the pace of the housing market as well as the number of mortgages approved. Those who are unable to move home before the stamp duty increases will likely be eagerly awaiting future inflation and interest rate announcements in the hopes of further improving their affordability in the long term.”

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