The annual rate of house price growth remained stable in November at 2.5%. Nevertheless, annual growth remains within the 2-4% range that has prevailed since March. Low mortgage rates and healthy rates of employment growth are providing support for demand, but this is being partly offset by pressure on household incomes, which appears to be weighing on confidence. The lack of homes on the market is providing support to house prices.
“The decision in the Budget to abolish stamp duty (SDLT) for first time buyers purchasing a property up to £300,000 (with relief for those purchasing a property up to £500,000) is likely to have only a modest impact on overall demand. In many regions, first time buyers already paid little or no stamp duty as the price of the typical first time buyer property was below the previous threshold of £125,000.” said Nationwide’s Chief Economist Robert Gardner.
“The potential savings are more substantial for borrowers where house prices are higher, especially in London and the South East. However, as the Office for Budget Responsibility noted, some of the benefit is likely to be passed on to existing home owners through higher house prices, though overall impact on prices is likely to be very modest (the OBR estimate they may be increased by c.0.3%, mostly in 2018).”
Graham Davidson, managing director of buy to let specialist, Sequre Property Investment, commented below:
“Seeing a steady house price growth of 2.5% year on year is positive for the current property market – whilst house prices grow at a sustainable rate slightly ahead of inflation, we can rest easy knowing that they are not reaching the dizzy heights of the last decade that saw a correction of prices in 2007. London is suffering a slowdown as a result of previous double digit growth due to prices previously moving too quickly, too fast. As a result, buy to let investors are turning their attention to areas of the north, such as Manchester, Liverpool and Sheffield where increases have been much steadier and therefore sustainable. These cities and their commutable surroundings are likely to continue to thrive within the current housing market, making them the ideal hotspots for investment.”
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