Buyers striving to complete property purchase before end of stamp duty holiday

Many buyers are now said to be rushing to try and complete the purchase of a property before the stamp duty holiday in the UK comes to an end. The stamp duty holiday was brought in last year in a bid to try and kick start the property sector. Read more

More millionaires created from house price boom than from lottery

It has been revealed that a greater number of millionaires have been created in Britain as a result of the house price boom than as a result of the National Lottery. In fact, according to reports over the past decade and a half twenty times more millionaires have been spawned from the boom in property prices than through the luck of the draw in the National Lottery. The study was carried out by High Street bank HSBC as the nationwide prize draw celebrated its fifteenth year. Read more

London property purchasers being hit hard by stamp duty

A recent report has highlighted just how hard property purchasers in the London area are being hit when it comes to stamp duty.

The extortionate cost of buying a property in London means that buyers have to also pay more for their stamp duty, as well as for their deposit, and it is estimated that the average upfront fee required by first time buyers in the city comes to over £20,000. This covers just the deposit and the stamp duty, and does not include additional fees such as legal costs and removal fees.

Figures indicate that London stamp duty costs have rise by over 800% in the space of just ten years, which equates to an 80% rise per year in the cost of stamp duty. With the average apartment price in London standing at around £263,000 the 3% stamp duty comes in at a shocking £8000. Coupled with the 5% deposit of just over £13,000, this brings the cost of just the deposit and stamp duty on an apartment with an average value to around £21,000.

The survey was carried out by Zoomf.com and shows the difference between the average apartment price and stamp duty costs in 1997 compared to today. In 1997, a decade ago, the average value of a flat in London was around £87,000, which meant that the stamp duty cost would have been under £900. In just ten years potential property purchasers for the London area – as well as other areas – have had to deal with rising property prices, rising stamp duty costs, increased interest rates, and increased additional costs such as legal fees.

Zoomf.com reported that it has tens of thousands of properties listed for the central London area, but only several of them fell under the £125,000 value, which is the threshold for stamp duty.

Tom Smith
20th October 2007

London Leads The Way On House Prices Again

The Land Registry’s latest House Price Index suggests that the average price of a property in England and Wales was £181,039 in June 2007. That is a 0.4% increase for the month (slightly less than the May), and the annual house price inflation rate is now at 9.1%.

It is prices in London that once again have driven the price growth. For the third consecutive month London’s rate of increase was more than 6% a year higher than the rate for England and Wales overall, and the difference is at its greatest since early 2005, but at that time it was London that was behind the rest of the country by 6%. The average house price in London in June 2007 was £338,950.

Average property prices across England and Wales for detached house were £271,530 in June 2007, up 7.5% from their level of £252,573 a year before. Flats and maisonettes showed the greatest increase on the previous June at 9.7%, increasing from £154,838 to £169,874 on average. For semi-detached properties the rise was 8.7% from £157,244 to £170,952, and for terraced houses the rise was 9.3% from £129,246 to £141,278.

All regions saw increases in their average prices over the last 12 months. The highest annual increase was in London at 15.8% – 1.5% on the month. The next highest annual increase was in the South East 1t 9.1%, although the region experienced a 0.3% decrease in prices during the month. The highest monthly change behind London was in the West Midlands at 1.2%, and an annual increase of 7.1%. The biggest loss in the month was in Wales at 1.1%, although its annual change was still an increase of 6.6%. The smallest annual rise was in the East Midlands at 5.5%, with a monthly fall of 0.6%. All in all half (five of ten) regions showed a decrease in average prices during the month.

In terms of county and unitary authorities Brighton and Hove saw the greatest annual price change with a rise of 16.3%. There were 25 areas in total that experiences an annual price increase in double digits. There were no county or unitary authorities that saw an annual price fall to June 2007. Strongest monthly growth was seen by Rutland at 2.5%, whereas Powys saw the highest fall of 2.4%. Behind London, Windsor and Maidenhead has the highest average prices at £327,345. Lowest prices were to be found in Merthyr Tydfil at £81,697.

The metropolitan district with the biggest annual increase in average prices was Manchester at 11.7%. Bury saw the highest monthly increase of 1.7%. The lowest annual rate of house price growth was in Salford, with growth of 2.8%. The district with the largest fall in house prices for the month was Barnsley with a fall of 0.6%. In Metropolitan districts Solihull had the highest average prices at £210,139, and the lowest average prices were in Oldham, at £106,971.

In London, the borough with the fastest rate of growth was Kensington and Chelsea, up by 25.7% for the year. The same borough had the highest monthly growth at 2.2%. Newham saw the lowest annual growth of only 6.3%, and Barking and Dagenham saw a monthly fall of 0.1%.

In the first four months of 2007, the number of house sales averaged 87,734 per month, representing an increase from the same period last year when sales volumes averaged 87,559.

Tom Smith

Super-Prime London Prices Shoot Upwards

The price of houses at the very top of the London property market achieved record growth in June. Research by estate agent Knight Frank shows record growth of 3.1%, which is the fastest growth in a month since the agency began its records in 1976. It also found that the annual rate for the same market was 34.5% in June, which is the largest figure for a years seen since 1979.

Those properties seeing the largest rises were between £1m and £2m, and those valued at over £4 million. House prices in the latter bracket have gone up by an amazing 43% in the last twelve months. The areas where house prices have gone up the most are SW3 and SW10, with a 40% rise on houses valued at over a million in the last year. Properties over a million pounds represent 7% of the London property market.

It looks as though prime London is having an almost unstoppable surge in house price inflation, but deeper research actually shows that the highest growth is at the very top end of the market – super-prime London. For example, the growth of properties valued at just below a million in the same areas had slowed down, no doubt under influence from recent interest rate rises and other economic factors putting the squeeze on homebuyers. A slowdown for super-prime London house prices would probably mean that there was a huge economic problem on a global scale as many buyers are foreigners.

Further out of central London, areas like Hampstead, Wapping and Wimbledon have seen growth of 11.4% in the first six months of 2007, giving annual growth of 21.8%. These don’t match up to super-prime increases, but still show superior growth to the broader London house market.

Knight Frank’s assessment is that the normal house market slowdown in the summer will be cooled even further by other economic factors, but super-prime central London will still have annual growth of around 25% come December.

Meanwhile it has been calculated that the cost of an extra bedroom in a large property in London is £161,221. That figure is £20,000 higher than the cost of an average home in Scotland. The figure is worked out from the average price of a three-bedroom property in the capital as £396,387, and the average price of a four-bedroom home is £557,608.

It is such a difference that forecasts are that London homeowners will look for more ways to improve or increase the size of their existing property such as an extension or loft conversion, rather than seek to move.

The difference between and one-bedroom property and a two-bedroom property is much less, at an average of £89,751. In London there are currently around 13,600 two-bedroom properties up for sale, but less than 6,000 one-bedroom properties. Such as shortgage of smaller properties is a concern for first-time buyers as that key difference in price for an extra bedroom would evidently be a showstopper for many new buyers. It is unlikely that this situation will ease with London market continuing to push upwards.

Tom Smith
26th July 2007