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The worst time to buy property in 150 years – but where next for UK property?

Posted 21st February 2023 by sdlt-admin

Have you purchased UK property that you paid Stamp Duty Land Tax on? See if you are eligible for a refund from HMRC on overpaid SDLT. We’ve reclaimed over £15 million in the last 12 months on overpaid Stamp Duty.

Read the article on London Post

Q1 of the property market has been one stained with instability. The knock-on effect of the Bank of England’s decision to raise interest rates to 3.5% and again to 4% to keep up with inflation, has resulted in dramatic increases in mortgage rates. As a result, the market has been virtually unaffordable for many, as the pressures of the cost-of-living crisis haveslashed the demand for housing with Brits looking to save their cash just to survive.

However, despite the bleak start to 2023 and while remaining in negative territory, the sales outlook for the next 12 months has halved to -20% from -42% in December, with market analysts predicting that inflation has reached its peak and buyers will make a comeback to the market. In light of this promising news, property expert and Group Chairman of Cornerstone Tax, David Hannah, explains how Britain could see a housing market revival in the second half of 2023.

Read: How long does a Stamp Duty refund take?

New research from asset management company Schroeder’s has found that 2023 is officially the worst time to buy property in 150 years, with housing affordability standing at a level not seen since 1876.

It is reported that the value of real wages fell by 2.5% last year, in one of the most significant declines since records began, according to the Office of National Statistics and consequently, house prices currently stand at more than nine times the average salary with homes in London now costing 12 times more than the average salary. As a result, homeownership ratings have fallen to levels not seen since the 1980s.

The increase in financial difficulty of owning a home in cities in the south, such as London, has fuelled an exodus of homeowners seeking less expensive property markets in the North – 62,210 homeowners moved from London last year. It is reported that houses in the Midlands cost 7.5 times the national average salary of around £32,000, compared with 6.5 in the North West, Yorkshire, and Wales.

New data from the government’s Stamp Duty Land Tax statistics reported that The East of England and the North West are the second and third most popular locations for housing market activity, with 39,237 and 38,838 property sales, respectively, in 2022.

The news that the sales outlook for the next 12 months has halved to -20% from -42%, coupled with financial analysts’ prediction that interest rates have peaked, will come as welcome relief for both people working in the industry and would-be-buyers.

As a result, Hannah is confident that despite the fall in market activity at the start of 2023, the fall in inflation could mean the market will see a resurgence in market activity. As interest rates fall – mortgages will become less inflated, and as a result, first-time buyers will be enticed back to the market – bringing a higher degree of stability and confidence to the second half of 2023.

David Hannah, Group Chairman at Cornerstone Tax, explains:

“Unsurprisingly, we have seen a fall in market activity at the start of 2023 – this is primarily due to the increasing cost of living eroding away atpeople’s spending power. There is also a large number of would-be-buyers who are waiting for house prices to bottom out, resulting in lower demand.

“However, the news that the inflation rate has fallen bodes well for the housing market in the second half of the year. The knock-on effect will mean interest rates on mortgages will fall back to a reasonable level and, as a result, will entice first-time buyers back to the market, thus increasing market activity and confidence.

“I have always said that the UK property market has tended to be more stable than any other global property market, and if the rate of inflation continues to fall, I have no doubt we will see a return to a higher level of confidence and stability for the second half of 2023.”

Have you purchased UK property that you paid Stamp Duty Land Tax on? See if you are eligible for a refund from HMRC on overpaid SDLT. We’ve reclaimed over £15 million in the last 12 months on overpaid Stamp Duty.

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