"Demand-focused housing initiatives do little for the nation's hard-pressed homebuyers"
When the government announced cuts in stamp duty land tax (SDLT) last week, it expected to create buyer demand that would see homebuyers come flocking back to the market to take advantage of tax cut savings.
However, research by property purchasing specialist HBB Solutions has revealed that the amount saved from the stamp duty cuts could be wiped out within a month anyway, as a result of the current high rates of upward house price growth.
The latest government cuts mean that stamp duty is only payable on property purchases over £250,000. This change means that the average homebuyer is due to save £2,500. But with house prices jumping £4,251 on average per month in England, the £2,500 saving will be gone in a month.
In fact, HBB Solutions said that even when taking the £2,500 saving into account, homebuyers will still be paying a further £1,751 on top compared to the current cost of purchasing a property.
HBB added that there are currently five regions where homebuyers stand to make the maximum stamp duty saving as a result of last week’s cut – London, the East of England, the South East, South West, and West Midlands.
However, based on the individual average rates of house price growth over the last year across each region, all five are due to see the cost of a home increase by more than £2,500 in a single month – London (£4,145), the East of England (£4,773), the South East (£5,256), South West (£5,697), and the West Midlands (£2,794).
HBB’s research also found that while the stamp duty saving for the average homebuyer is lower across the remaining four regions of England, house prices across all four have still climbed by thousands of pounds a month over the last 12 months, which would see the current SDLT saving on offer also cancelled out within a month’s time.
“Those lucky enough to be in a position to buy a property will, of course, welcome the SDLT cut, and the savings being handed down to them,” Chris Hodgkinson, managing director at HBB Solutions, commented. “However, the market is already overheating at an alarming rate and the reality is that the home they are currently in a position to buy will cost them thousands of pounds more by this time next month.
“So, while they will still save on the cost of stamp duty when they do buy, the price they will be paying upfront will have consumed this saving and then some. Proof, if it were ever needed, that demand-focused housing initiatives do little more than grab headlines, at the detriment of the nation’s hard-pressed homebuyers.”