One-third of homes currently for sale are chain-free, primarily driven by landlords and second-homeowners reacting to anticipated tax changes.
- House sales have surged by 25% year-on-year, with a significant increase in new listings from landlords and second-homeowners.
- Falling mortgage rates, now averaging 4.3% for a five-year loan, are fueling increased sales and property market activity.
- Anticipation of potential increases in capital gains tax and doubled council tax motivates property listings, especially in coastal regions.
- House prices have modestly increased by 0.7% nationwide, with variances across different regions, as more properties enter the market.
According to Zoopla, a prominent property search website, the UK housing market has witnessed a 25% increase in house sales compared to the same period last year. This rise is significantly attributed to an influx of new listings, driven largely by landlords and second-homeowners looking to divest properties amidst looming tax changes. After a period of reluctance, many homeowners are now taking advantage of falling mortgage rates, encouraging more activity in the market. The average rate for a five-year, 75% loan-to-value mortgage currently stands at 4.3%, its lowest level since May 2023.
A notable proportion of the newly listed properties are reportedly from landlords and owners of second homes. The motivation for these listings stems from rising buy-to-let mortgage rates and the anticipation of changes in tax policy. In particular, there’s an expectation that the government might increase capital gains tax on residential property in its impending Budget announcement, potentially raising the basic rate from the current 18%. Moreover, there are plans by local councils to double council tax on second homes within the coming year, further prompting property sales.
Zoopla data reveals regional insights into the property market dynamics. In London, two- and three-bedroom houses are most likely to be chain-free, signaling their past use as rentals or secondary homes. Conversely, outside London, one- and two-bedroom flats predominantly make up the chain-free listings. Approximately 13% of all homes currently listed were previously rented out, as landlords aim to sell before any unfavorable tax adjustments are implemented.
The rise in listings is especially pronounced in coastal areas such as Truro, Torquay, Exeter, and Bournemouth. These regions have observed a 40% increase in properties for sale over the last year, as second-homeowners rush to offload properties in anticipation of heightened council taxes. Richard Donnell, executive director at Zoopla, comments that the tax speculation coupled with previous alterations has expanded housing supply, offering greater choice for buyers, which is expected to keep house price inflation in check over the next year.
While Zoopla’s assessments indicate a mere 0.7% increase in house prices over the past year, this is in stark contrast to the more substantial 3.2% rise reported by Nationwide. This discrepancy is partially due to a sharper decline in prices noted by Nationwide last summer. Regional variations show that while prices have decreased in the South West, South East, and East of England, where affordability remains a concern, regions like Northern Ireland have seen a notable price increase of 5.7%, with Northwest England also experiencing a 2.1% rise.
Looking ahead, Zoopla forecasts a modest rise in house prices due to an increasing supply of homes in the market. Such growth is expected to remain tempered, providing prospective buyers with expanded choices and potentially stabilizing the housing market.
The current property market dynamics, driven by tax speculations and economic factors, are reshaping housing availability and pricing trends.
