What’s in next week’s Budget?
The average price of a house across the UK hit £250,000 for the first time, at the end of last year. The Office for National Statistics (ONS) said house prices in December 2013 were 5.5 per cent higher across the UK compared with a year earlier, driven by a 12.3 per cent increase in London. House prices are also rising across Essex. According to the Nationwide House Price Index, prices across Essex as a whole are up by 8 per cent year on year.
The news suggests that tens of thousands more buyers will be paying stamp duty at the 3% rate, which starts at the £250,000 threshold, and there are calls for the levy to be reformed in the Budget next week. The money the Treasury takes from residential stamp duty is expected to triple to £14 billion by the end of the decade thanks to rising house prices, according to analysis by accountants Grant Thornton for The Telegraph.
Alan Williams, Fenn Wright’s Managing Partner says: “the sustained recovery in confidence and demand, low interest rates, and the Help to Buy scheme are all driving prices and our offices are extremely busy all along the A12 corridor in Essex and Suffolk.
“Some sellers who bought around the time of the downturn are no longer in negative equity and there are more first-time buyers around now than we have seen for the last five years. This release of pent up demand looks set to drive the market throughout 2014.
“Looking further ahead, we know that The Bank of England has held their base rate at 0.5% for a further month, with market analysts predicting that they will remain at their historic low until spring next year.
“With rising prices and a fundamental undersupply of new and previously owned properties policy makers face a real challenge in the next few years. None of us wants the recovery dampened down but we do want stability. It will be interesting to see how the Chancellor balances the various factors in the Budget on19 March, as he will also no doubt have an eye on nurturing a feel good factor for the election in 2015 too. Is it time to end the Help to Buy scheme? Will he make changes to Stamp Duty? There is another option; in truth he may not do anything in particular to directly affect the housing market!”