Zoopla: Property tax reforms could make housing market even more price sensitive – warning
Increasing numbers of listings have had asking price cuts in the aftermath of changes to Stamp Duty thresholds, which is pushing down house price growth, Zoopla claims.
The latest House Price Index from the portal shows one in ten homes registered a cut to the asking price in July, well above the five-year average of 6%, showing a continued buyers market
Zoopla warned that getting the price right initially is crucial in the current market, claiming that homes priced too high take twice as long to sell.
The index shows that sales agreed are still up 5% on last year but Zoopla has also cautioned that speculation on possible tax changes may impact homes valued at over £500,000 – a third of homes for sale.
Buyer demand is up 4% annually, according to the index while there has been a 10% annual rise in stock for sale. Much of that has been on the market for a whole though with new supply up just 0.4%.
Regional markets are behaving differently with northern regions seeing an average time to sell of 27 days in July and southern regions 39 days, Zoopla said.
Analysis of markets with the most unsold homes shows that coastal areas across southern England have the most competition among sellers. In Truro, Exeter, and Bournemouth, more than a quarter of homes for sale have been on the market for over six months, more than a third higher than the average. This increased choice, a result of a larger number of second homes for sale in response to higher council tax, is also impacting prices, which are 1.1% and 1.4% lower than a year ago in these markets.
Other areas with an above-average stock of unsold homes include York, Torquay, and Llandrindod Wells in Wales, markets where sellers need to be most realistic on price if they want to sell this year. In contrast, there are markets with a lack of supply, including Dundee, Wolverhampton, outer suburbs of London, and Northampton.
Zoopla said house price growth has slowed over recent months, although this slowdown looks to have stabilised with average house prices now 1.3% higher than a year ago
Commenting on the report, Richard Donnell, executive director at Zoopla, said:
“There is plenty of demand for homes and more people are looking to move. However, buyers also have much greater choice to choose from, especially across areas of southern England. There is a clear link between buyer choice and price inflation and how long it is taking homes to sell.
“Sellers need to understand local market conditions when considering how to market their home, setting the right price and how quickly they would like to sell. The risk of being too ambitious on price is your home taking more than twice as long to find a buyer – or not selling at all.
“We expect UK house price inflation to continue in a range of 1.5-2 per cent over the rest of the year. There are signs that prices are firming in southern England but price growth is slowing across northern regions. The market continues to record seasonally strong sales as those selling their home seek to secure their next home. The market remains on track for five per cent more sales in 2025 at 1.15m.”
Tom Bill, head of UK residential research at Knight Frank, said:
“A price-sensitive housing market has become a whole lot more price-sensitive over the last fortnight thanks to the speculation around property taxes. With supply still outweighing demand as autumn approaches, we expect price growth this year to hover not far above zero. A November Budget means weeks of more speculation in a tiresome re-run of 2024 that will keep a lid on transaction activity and stamp duty revenue.”
Nathan Emerson, chief executive of Propertymark, added:
“Stable house prices within the housing market are a welcome sign for groups such as first-time buyers, who can better take advantage of a period of steadiness.
“Despite property transactional taxes increasing in some nations and financial and economic pressures continuing for many, there still seems to be plenty of property choice for buyers. It remains important that sellers continue to have realistic price expectations and place their property on the market accordingly to help empower an efficient sales process.
“It is also important to consider the crucial role that housing plays within the wider economy, and it is positive to see commitments from all governments across the UK to deliver much-needed new housing stock to keep pace with predicted population growth. We are also hearing of future potential proposed changes regarding Stamp Duty. However, it is vital that tax reform is conducted in a way that does not penalise aspiring homeowners with additional costs that hinder their chances of moving house.”
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