If you keep up to date with our monthly property price update, it should come as no surprise to you that since the start of the pandemic house prices have been on the rise. So much so that millions of UK homes have been pushed into a higher Stamp Duty Land Tax (SDLT) bracket, which means prospective buyers are on the hook for even more due in taxes.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
While the stamp duty holiday helped keep activity steady during the height of the pandemic, now that the holiday is over, homebuying has become even more expensive.
Cost of living increase
Higher home prices is just one of the costs rising in this economic climate, as all living expenses are currently on the rise, with no sign of slowing down. According to Zoopla, Uk house prices have risen £29,000, or 13%, since the pandemic began in March 2020, which includes a rise of 8.3% in the last year alone. This increase in house prices nearly matches the current national average annual salary of £31,096!
With no end in sight to the squeeze on UK households’ budgets, prospective buyers will continue to struggle with the increased living costs around the country. However, even though the economy has been struggling thanks to many globally impactful factors, the demand for homes has stayed pretty consistent. In fact, the pandemic was thought to drive most of the activity for a period of time as people sought new environments that aligned with their new or adjusted lifestyle preferences. This demand set against the limited supply has helped the UK house prices rise and stay where they are. Fortunately for some, there are signs that the supply will steadily increase, making homebuying slightly more affordable.
HM Revenue & Customs confirmed this demand, when they revealed that, even though the SDLT holiday helped buyers save money for over a year, the SDLT receipts all across the nation remained well into the billions.
First-time buyers hit hard
Of course, the rising house prices have impacted many first-time homebuyers attempting to get a foot on the property ladder. An average price for a home that first-time buyers are purchasing is £225,000, up £27,000 from just two years ago. One of the biggest obstacles to home-buying — saving up for a deposit — just became even bigger, at least £4,000 bigger, in fact. Average household earnings to be able to qualify for mortgage deals has also increased, by £5,000 annually or £417 per month, putting even more strain on household budgets.
For those seeking to move to a new home, they will benefit from increased property values when it comes time to sell, but new entrants to the market will need to find ways to come up with even more money to fund their purchase. Access to mortgage deals with smaller deposit requirements (as long as they meet the criteria for all other aspects of a mortgage loan) for first time buyers has become even more important than ever.
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