A recent survey by property website Rightmove reveals that the UK housing market is beginning to feel the impact of an upcoming increase in property purchase taxes. According to the data released on Monday, the surge in asking prices for newly listed homes has slowed in advance of the tax change.
Asking Prices Rise, But Growth Slows
Between January 12 and February 8, the average asking price of homes listed for sale increased by 0.5%, reaching £367,994 ($464,666). While this marks an upward trend, the increase is weaker than usual for this time of year and represents a slowdown from the previous four-week period, where prices had risen by 1.7%.
Compared to the same period last year, asking prices have risen by 1.4%.
Impact of Tax Break End on Buyer Behavior
Rightmove’s head of partner marketing, Colleen Babcock, pointed to the upcoming end of a temporary tax break in England and Northern Ireland as a factor affecting the market. This tax break, which benefits buyers of cheaper homes and first-time buyers, will expire on March 31.
Babcock warned that some buyers might miss the deadline due to delays in conveyancing work, which could further disrupt the market. She suggested that a short extension from the government might be justified to help alleviate the pressure.
Increased Market Activity, But Cautious Outlook
Rightmove reported that the number of new properties coming to market has risen by 13% compared to the previous year. Buyer demand is also up by 8%, and agreed sales have increased by 15%. However, the UK housing market’s growth has been tempered by slower-than-expected reductions in borrowing costs.
Last year, the housing market had gained some momentum, fueled by expectations that borrowing costs would decrease. However, the Bank of England’s recent decision to reduce its benchmark Bank Rate from 4.75% to 4.5% on February 6 has done little to ease market uncertainty. The Bank of England has indicated that it will proceed cautiously in making further changes to borrowing costs.
Conclusion
While there has been some positive movement in the housing market, the looming tax increase and ongoing concerns over borrowing costs are contributing to a more cautious outlook. As the March deadline approaches, it remains to be seen how the market will respond.
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