Ahead of last year’s historic vote to leave the European Union, then Chancellor George Osborne warned that any such result would lead property prices to fall significantly in the short-term.
In fact, Osborne claimed that any UK departure from the EU could cause UK house prices to fall by as much as 18%. This was good news for many would-be homeowners stuck in the rental market due to affordability issues.
Stamp Duty
The average price of a UK property at the time of the EU vote meant that Mr Osborne’s prediction meant the average residential property could fall in value by over £50,000, within two years of the vote.
Mr Osborne’s predictions seemed extremely bold, given the housing shortage in the UK – and so it has proved!
Alongside uncertainty, another issue playing a major part in prospective purchaser’s attempts to get onto the property ladder is Stamp Duty. These reforms, introduced by Osborne, have contributed to a slowdown in the market and a sharp fall in property sales in London.
Paul Smith, CEO of haart estate agents, noted: ‘Stamp duty is stunting the mobility of a whole generation. Until Government revises this regressive tax we cannot hope to solve the affordability crisis.’
Property Prices
The Office for National Statistics yesterday released its latest house price data, which showed that the average price of a property in the UK is up by 5.1%, or £11,000, year-on-year.
Of course, these figures suggest that the aforementioned ‘housing crash’ seems very unlikely- bad news for renters holding aspirations of owning their own property.
Stamp Duty is ‘stunting the mobility of an entire generation’
Continuing, Mr Smith said: ‘How can economists and industry commentators alike claim we are experiencing a Brexit induced downturn in the property market, when the average buyer is having to pay £11,000 more to buy a home than they did in the month of the vote to leave [the EU]?’
‘London experienced weaker house price growth again in July, but it would have done little to relieve aspiring buyers in the region, as the average house price continued to creep up to the half a million pound mark.’
‘Our latest branch data shows that the number of first-time buyers registering in London is down 27% on the year. Salaries simply cannot keep pace even with more subdued growth, and being stuck in a never ending rental trap is becoming the reality for increasing numbers.’.’[1]
[1] https://www.landlordtoday.co.uk/breaking-news/2017/9/a-growing-number-of-tenants-are-stuck-in-a-never-ending-rental-trap