The average asking price of properties in the UK is now over £320,000, which puts them above the 1% stamp duty threshold and good news if you want to sell a home. The increase in house prices is the biggest since the property boom of 2007. The growth is mainly due to the shortage of available properties on the open market, and desperate buyers are willing to pay the asking price – particularly in the capital, where over 99% of properties are sold at the asking price.
On properties worth more than £250,000, stamp duty increases to 3%. There are calls for the government to lower this to 2% or increase the threshold to £300,000. Reducing the rate to 2% would cost 1 billion in lost Treasury revenue, whereas raising the threshold to £300,000 would be a loss of 750 million.
White space in Britain is at a premium, and the population is increasing at an alarming rate; due to immigration and natural growth, it is clear that something needs to be done about the housing crisis. It is estimated that by the year 2023, the South of England will need around 180,000 more homes than it will provide.
With London properties being so hard to come by, many are moving out to nearby towns and cities such as Brighton, Cambridge, and Oxford, where there is also an increased demand for all housing types.
The property prices in London are further made higher by the number of foreign investors purchasing properties in the capital with no intention of living in them. Because their investment is only likely to rise in price, it is seen as a very safe bet for those wanting a good return on their money. Unfortunately, this has led to many properties remaining empty, much to the anger of locals who could not purchase a home due to the extremely high prices and lack of housing.
Building society, banks, and other lenders are much more cautious than they used to be when they would lend around seven times a buyer’s income. However, now maybe not conservative enough, and need to look at if the mortgage holder could still afford the mortgage if interest rates rise by 1%.
The problem with supply and demand in the UK will not be resolved any time soon, with space being a premium, particularly in the southeast. It is estimated that by 2018 there will be a shortage of around 160,000 homes, with the overspill from London stretching as far as seaside towns like Brighton in Worthing.
In a bid to stop this trend, some councils are considering imposing fines on homeowners who purchase only to leave the properties empty. It is becoming increasingly difficult for Londoners and other British folks to find housing in the capital, whether for rent or for sale that they can afford. New housing is often sold off-plan to overseas investors and then left empty.
It is very irritating for British people to see much-needed homes standing empty and purchased purely as investments when there is such a housing shortage.