There will be a spike in property transactions in the coming months as buyers rush to take advantage of the stamp duty holiday before it ends in March 2025.
This is according to Nationwide Building Society’s chief economist, Robert Gardner, who spoke in response to the Autumn budget on Wednesday.
Chancellor Rachel Reeves confirmed that the temporary stamp duty relief will expire on March 31, 2025, as set out by the previous government.
Currently, first-time buyers pay no tax on the first £425,000 during the stamp duty holiday, but this threshold will drop to £300,000 by the end of March. Meanwhile, other home buyers will see the nil rate drop from £250,000 to £125,000 on March 31.
Gardner believes there will be a wave of buyers rushing to purchase property before March, and this will ignite the market.
According to the latest Nationwide House Price Index, property prices rose by 0.1% in October compared to the previous month. Over the year they grew by 2.4%, which is lower than the 3.2% growth in September.
It appears that the housing market has slowed in the run-up to the Budget. But Gardner thinks the stamp duty changes could change the landscape in the coming months.
He said: “The main impact of the stamp duty changes is likely to be on the timing of property transactions, as buyers look to complete their home purchases before the tax change comes into effect.
“This will lead to a jump in the number of transactions in the first three months of 2025 (particularly in March), and a corresponding period of weakness in the subsequent three to six months, as happened in the wake of previous stamp duty changes. ”
In which areas will starters experience the most impact?
He said data suggested the stamp duty change would affect around one in five starters. This would vary in different parts of the country, with buyers in South East England experiencing the biggest impact. Here, 40% of first-time buyers paid between £300,000 and £425,000 for their home, so the change will increase the cost of moving for affected first-time buyers by an average of £2,900, according to Nationwide.
The least affected areas are Yorkshire & The Humber, Northern England and Northern Ireland, where less than 10% of first-time buyers paid between £325,000 and £425,000 for their home.
For many first-time buyers – even those who can take advantage of the tax break – there are still affordability issues.
Speaking via the Newspage Agency, Emma Jones, director of Whenthebanksaysno.co.uk, was concerned that consumer confidence was low. She said: “The property market has been in flux for a number of months now as mortgage rates have fallen, which has boosted confidence and really increased transaction levels. The budget has undermined that confidence and the consequences are already clear.
“Yesterday the markets gave their verdict and it was that they didn’t like it at all. Many potential buyers are now assessing how the budget will affect them and how it will affect their buying and purchasing power.
“A few days ago it looked like we would have a confident and busy end to 2024, but now it seems hesitant and quiet. The stamp duty deadline may see a number of transactions in the first quarter of the year, but many people simply don’t have the confidence to move forward with their plans.”