House prices up 1.6% in first rise since lockdown as stamp duty holiday kicks in
HOUSE prices have risen for the first time in four months in a "mini-boom" following a stamp duty holiday, according to a new report.
The average cost of property jumped by 1.6 per cent - or £3,770 - in July in a "surprising spike", a Halifax price index found.
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Across the UK, the average property value was £241,604 in July, up from £237,834 in June. Prices also increased by 3.8 per cent over the year.
The monthly report tracks house prices across the UK and monitors how much they change.
Of course, it's worth noting research that covers a longer period of time, such as quarterly or annual, gives a more accurate overview of the market.
The increase comes as the chancellor's stamp duty holiday for properties up to £500,000 kicks in, saving buyers thousands of pounds.
What is stamp duty?
STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.
Up until July 8, most house-buyers in England and Northern Ireland had to pay stamp duty on properties over £125,000.
This was temporarily increased to £500,000 until March 31, 2021 in the government's mini-Budget in July 2020.
The rate a buyer has to fork out varies depending on the price and type of property.
Rates are different depending on whether it is residential, a second home or buy-to-let, or whether you're a first-time buyer.
The usual system in England for residential properties means:
- First-time buyers pay nothing on properties below £300,000 (and relief available on properties of up to £500,000)
- You pay nothing if the property costs below £125,000
- You pay 2 per cent if it is worth between £125,001 and £250,000
- You pay 5 per cent if between £250,001 and up to £925,000
- You pay 10 per cent if it is between £925,001 and £1.5million
- You pay 12 per cent on anything over £1.5million
For second homes or buy to let properties:
- 3 per cent on purchases up to 125,000
- 5 per cent on purchases between £125,001 and £250,000
- 8 per cent on purchases above £250,001 and £925,000
- 13 per cent on purchases above £925,001 and £1.5 million
- 15 per cent on purchases above £1.5 million
Stamp duty rates are different in and .
Rishi Sunak's house move perk aims to boost the economy through the property market after it almost stopped completely in the first months of lockdown.
But critics warned the tax break could push up prices as buyers now have more cash to compete with others to secure deals.
House prices fell by 0.3 per cent in March, and again by 0.6 per cent in April as the UK shutdown to slow the spread of the coronavirus.
In May, they dropped again by 0.2 per cent according to the index, and stayed the same in June.
The number of new homes going onto the market has remained low though, meaning there's stiffer competition among buyers which has also contributed to rising prices.
Russell Galley, managing director, Halifax, added that "the immediate future for the housing market looks brighter than many might have expected three months ago".
But he warned: "However, looking further ahead, there is still a great deal of uncertainty around the lasting impact of the pandemic."
Mr Galley said impending rising unemployment could force prices to drop again "in the medium term".
Miles Robinson, head of mortgages at online mortgage broker Trussle, said that "only time will tell" whether the recovery will last.
He said: "We're living in a time where many people's finances have been impacted and household finances are stretched, so any growth we're seeing now could well be short-lived."
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Mr Robinson added that rising house prices, while good for sellers, may leave first-time buyers locked out of the market.
He added: "Not only do rising house prices mean they will now be getting less for their money, but this comes alongside a shrinking range of high loan-to-value products available, increasing costs for mortgages and intensifying scrutiny from lenders."
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), added: "Looking forward, we are being told the housing market revival will be tested by rising unemployment and the imminent end of the furlough scheme, but there's not much evidence of a slowdown at the moment."
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