UK housing market continues to wrestle with fear and uncertainty surrounding future house prices. Rachel Reeves, the Shadow Chancellor, is apparently floating the idea of a tax on houses sold above £500k. This would be a substantial step toward eliminating the capital gains tax exemption for primary residences. This amendment would only apply to residential properties worth more than £1.5 million. These tiered rates changes are an attempt to bring in more money for the government.
Now as speculation about these tax changes continues to percolate, estate agents are reporting a dramatic increase in market activity. As of last week’s report, a surprising one out of every ten homes for sale now has a price cut on it. That’s above the five-year average of six percent. Homes with price cuts tend to languish on the market for nearly two-and-a-half times as long. On the flip side, homes that are priced right, right away, sell a lot quicker.
Previously, about a third of listings cost more than £500,000. That means millions of would-be homebuyers are likely to be impacted by these proposed tax increases. London and the south-east of England are set to bear the brunt of these changes. This is largely because they have higher property values.
Even with all that tax speculation hanging over the market, the number of sales that went under contract in July increased by five percent compared to last year. And average property prices were up a tame 1.3%, Zoopla found in its latest monthly, monitored by Property Policy UK, … Continue reading → But experts warn that a new round of ugly debates over new property taxes could cool an otherwise fiery housing market.
Jeremy Leaf, an estate agent and a former chair of the Royal Institution of Chartered Surveyors. Read on to find out what he had to say about today’s market forces.
“The market inevitably lost a little steam over the summer period with so many decision makers away and listings continuing to pile up.” – Jeremy Leaf
In a speech announcing his resignation, Carney warned about the corrosive effect of tax speculation on market confidence.
“Unfortunately, perhaps the government do not appreciate that even rumours of a new property tax can have a detrimental impact on housing market confidence and activity, which we certainly witnessed on the ground since the story broke last week.” – Jeremy Leaf
Tom Bill, a property expert, noted that the housing market’s sensitivity has increased significantly due to speculation about potential tax changes.
“A price-sensitive housing market has become a whole lot more price-sensitive over the last fortnight thanks to the speculation around property taxes.” – Tom Bill
Richard Donnell, an executive director at Zoopla, advised sellers to take local market conditions into account when pricing their homes.
“Sellers need to understand local market conditions when considering how to market their home, setting the right price and how quickly they would like to sell. The risk of being too ambitious on price is your home taking more than twice as long to find a buyer or not selling at all.” – Richard Donnell