Buyer surge sees home price boom
01-05-2016
THE property market looks set for a frenzied start to the year with 10 buyers chasing every home for sale.
Demand from buyers who are desperate to find a home is surging while the supply of properties for sale continues to dwindle, new figures show.
Experts say UK house prices could soar to fresh highs over the next few months as property investors join the rush to buy before they face a new surcharge on stamp duty from April.
The number of house hunters registering with estate agents soared by an incredible 20 per cent in November 2015 alone, according to new figures from the National Association of Estate Agents (NAEA).
There are now 403 buyers registered at the average branch, up from 336 in October.
Yet at the same time the average number of properties for sale dipped to just 41, leaving 10 buyers chasing every property.
NAEA managing director Mark Hayward said house hunters hoping to find their dream property in the new year have rushed to register their interest with agents, while supply has dipped again.
“It is clear that we’re faced with a crisis here, the housing market needs addressing as a matter of urgency,” he said.
Hayward said first-time buyers are being priced out of the market, with numbers plunging by 10 per cent in November.
Sales to first-time buyers have nosedived dramatically and estate agents believe it will only get worse, Hayward said.
Brian Murphy, head of lending at the Mortgage Advice Bureau, said the traditional winter housing market slowdown isn’t happening this year. “Activity has been encouraged by record low mortgage rates which make monthly payments more affordable,” he said.
It is clear that we’re faced with a crisis here, the housing market needs addressing as a matter of urgency
Now house-hunters are facing competition from a fresh surge in buy-to-let investors looking to purchase rental properties before forthcoming tax changes bite.
In his Autumn Statement in December, Chancellor George Osborne announced he would introduce a new three per cent surcharge on stamp duty for buy-to-let investors and second homeowners from April 1.
Osborne said he wanted to help first-time buyers beat off investor competition to get on the property ladder but now it seems this may backfire.
His plans have triggered a rush of buyers looking to beat the surcharge over the next few months, which will increase the duty on a £300,000 property from £5,000 to a whopping £14,000.
A new survey by the Property Investors Network suggests that as many as six out of 10 buy-to-let investors plan to buy extra properties ahead of the stamp duty surcharge.
It said this would cause a mini boom in property prices and make life harder for first-time buyers by forcing prices even higher.
Their one hope is the Chancellor will make buy-to-let less lucrative in the longer run.
From April 2017 Osborne will also phase out higher rate tax relief on buy-to-let mortgage payments. If his tax crackdown eventually triggers an exodus of buy-to-let investors this year’s spring boom could ultimately end in a crash.