This is according to the latest analysis from Zoopla which found over a quarter, or 1.2 million, properties have gone from being exempt from the tax to being elevated into the initial £125,000 threshold in England in Northern Ireland.
The situation in Wales and Scotland is similar, with 360,000 homes being pushed across the initial threshold at which stamp duty becomes payable (£145k in Scotland, £180k in Wales).
It’s a trend which has been caused by the fact the average UK house price has climbed £29,000 or 13% since the start of the pandemic in March 2020, said Zoopla.
The property website noted the increase in house prices was almost equal to the current national average annual salary of £31,096.
And it came as prospective buyers were also having to cope with increased living costs around the country.
How have rising house price impacted first-time buyers?
According to Zoopla, first-time buyers now spend an average of £225,000 on their first home, this is an increase of £27,000 compared to just two years ago.
As such they now need an additional £4,000 for a deposit, despite average annual earnings increasing by only £2,704 over the last two years.
What’s more, said Zoopla, they also need an additional £5,000 in annual household earnings or income to secure a mortgage – this is an extra £417 per month.
Gráinne Gilmore, head of research at Zoopla said: “Buyer demand has been very strong ever since the end of the first lockdown in 2020, and the start of this year has been no exception. This demand, coupled with constrained levels of supply has put upward pressure on pricing.”
She added: “While homeowners who make a move will see the benefit from increased property values when they sell, new entrants to the market will have to find additional finance to fund a move – meaning the reliance on the ‘Bank of Mum and Dad’ is likely to increase among first-time buyers.
“It also highlights the importance of first-time buyers having access to mortgage deals with smaller deposit requirements if they can meet the criteria for all other aspects of a mortgage loan.”
When will house price growth start to slow down?
There has been concern for months that house prices cannot sustain this level of growth and are therefore headed for a downturn.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, thinks things might start to slow down soon.
“They’ll come a time when the pressure on buyers takes a toll,” she said. “It could mean enthusiasm for property starts to cool, as the cost of living reaches a tipping point.
“Alternatively, the turning point may be precipitated by mortgage lenders, who raise rates and factor in higher costs to mortgage affordability calculations – cutting more buyers off from potential loans.
“Neither is likely to mean price drops, but either could significantly slow the pace of growth as we go through 2022.”
