Hamptons International says average house prices across England and Wales are set to rise by 4 per cent next year – down from the 8 per cent expected this year.
The changes to stamp duty that came into effect on 4 December have had a significant impact on the outlook for the housing market in 2015, the estate agency says.
Analysis of home sales in 2014 shows that 72 per cent of all buyers would be better off under the new regime, 27 per cent would see no difference and only 2 per cent would be worse off. The typical gain is equivalent to 1 per cent of the average purchase price.
Fionnuala Earley, research director at Hamptons International, says the reforms will both give buyers more to spend and make it slightly easier for them to pass affordability tests.
“Both of these should boost transaction numbers and price growth, but this is likely to be a short term effect as prices adjust, eroding the benefit of the tax cut. The largest effect is likely to be felt in the first half of 2015, mitigating some of the usual slow down we’d expect in the run up to an election.”
Earley adds: “London markets are expected to remain subdued in 2015, with price growth staying broadly flat. This reflects ongoing affordability concerns and expectation that recent price growth is unsustainable, especially in the face of low wage inflation. The changes to Stamp Duty will prove a drag on house prices above £1 million as vendors have to adjust their expectations. This will add downward pressure to prices in that bracket.”
