Welcome to 2015, and a noticeable increase activity, even after December’s pretty decent performance.
The big question on everyone’s lips for January has been whether the changes in UK Stamp Duty by the Chancellor of the Exchequer from last month will have had any impact – good or bad – on the property market.
Clearly there were no negatives to be associated with the drop in duty payable on purchases under £937,000, but what about the big fish, fat cats and regular folk of London who are looking at property over that level? Would they be put off by their extra tax liability, or simply not even notice a few thousand pounds on the purchase price? As it happens, neither.
Certainly buyers have noticed the increased duty on higher end property, but they’re not put off and are generally becoming a bit creative with it, negotiating for stamp duty to be funded – in full or in part – by the vendor. This is much like buyers who were looking at property that fell just over the 3% threshold at £250,000 that came into force in March 2000. It just takes a while for people to get used to the new system, and either find a creative – and legal – way around it, or simply, and literally, move on.
Frankly, there’s really very little that is going to put a halt to London’s market for property above £1million as most buyers at that level have already made plenty of cash on their previous home and are simply shifting equity. Of course nobody wants to pay extra tax, but most transactions occur outside of purely financial concerns, with factors of family, schooling and work driving many a decision to move.
We touched on property prices in November, and these have now settled into a new lane, about 10% off what anyone could have got in the spring madness of 2014. Vendors have accepted this adjustment, with plenty of evidence now available that prices are simply not at that point anymore, but also not on a downward trend.
Banks are also helping to chivvy the market along, with easier borrowing for them making life easier to pass that on to customers, along with more flexible lending and deposit requirements. Conversely that’s making life a bit difficult for building societies who are unable to borrow in the same way as banks, and thus hampered on the competition front. It would be a shame for building societies to disappear from the lending scene and it will be interesting to see how creative they get over the coming months to retain their standing.
Coupled with the general feeling of optimism that the new year brings, lower lending costs and lower fuel prices are contributing to an all-round feeling of having slightly more cash to spend, and this is clearly having people look again at whether now is an opportune time to move home.
See you in February!