UK Property Bubble Bursting? – House Prices Fall As Stamp Duty Holiday Ends
House Prices Fall As Stamp Duty Holiday Ends
UK House prices dropped by 0.5% in June just as the long stamp duty holiday began to be phased out, according to the Halifax.
Annual property prices still rose 8.8%, resulting in average prices more than £21,000 higher, which is more than most people saved on stamp duty in the mad scramble to buy a home. The average price of a UK property according to the lender is now £260,358.
The Government removed the need to pay stamp duty on some properties for much of the pandemic in a bid to stimulate the market in England, Wales and Northern Ireland.
The move worked, but critics argue that it caused price inflation and could created a property bubble if demand falls.
Mortgage lenders, like the Halifax and Nationwide, long with estate agents are confident that, “The power of home movers to drive the market won’t fade entirely as the economy recovers”.
Demand remains high among buyers seeking larger family homes with the average price of a detached property climbing faster than any other type over the past 12 months – shooting up by more than 10% or almost £47,000 in cash terms.
Detached homes now cost on average more than half a million pounds, £200,000 more expensive than the typical semi-detached house.
Double tax on holiday homes
A Welsh local authority plans to double council tax on second homes in order to deter the growing number of English buyers snapping up seaside holiday homes on the coast of Wales.
Owners of holiday homes and empty properties in Gwynedd will be hit with double council tax from next month after Councillors backed the increase in premium from the current 50%. The tax could raise an extra £3m a year for social housing.
More than one in ten houses in Gwynedd was now classed as a second home.
Councillors in the larger city of Swansea are planning a similar tax hike.
Buyers, presumably priced out of the more expensive Devon and Cornwall, have been buying up properties in Welsh beauty spots. The effect of this prices locals out of the market and destroys local village life where properties are only used at weekends.
Councils have powers to increases local taxes on empty properties and second homes.
Cheap money also fuelling the bubble?
There is a buy-to-let mortgage available through the NRLA offering a 2 year fixed rate of 1.25%, with free legal fees and a £250 cashback! You could borrow a million pound on interest only and the mortgage payment would be just over £1000 per month. You couldn’t rent a million-pound home for that.
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