New data has shown the property market in England and Wales may have suffered severe damage as a result of changes to stamp duty.
According to the latest Nested Market Efficiency Monitor, which takes a quarterly look at the health of the property market using data from the land registry and Zoopla, transactions have fallen across the country.
The survey reveals that transactions across England and Wales fell by 19% year on year, with a much steeper drop of 35% recorded in London.
This slowdown has been felt especially hard at the top end of the market, where the majority of listed properties valued over £500,000 have gone unsold. This is in comparison to properties valued under £500,000, of which 41% are under offer.
In the capital, there is a stark East/West split. In the higher valued West of London, only 15.4% properties are under offer. The East however remains stronger with activity amongst first time buyers and investors, with the number of properties under offer here higher at 28%.
The falls have been largely attributed to changes in Stamp Duty, which prompted investors to leave the market.
Previously, Stamp Duty had a ‘slab system, which saw homebuyers charged a percentage of the full purchase price as soon as it hits certain thresholds.
Under the new system, introduced in December 2014, the former Chancellor, George Osborne, created a ‘slice’ system, with different percentage rates applied to each portion of the price.
There is no levy for properties under £125,000, then 2% up to £250,000, 5% up to £925,000, 10% to £1.5 million, and 12% above that.
“Brexit hasn’t helped the situation but the data shows that the government’s stamp duty tinkering has stalled the market. This may have slowed rising house prices, but it has also stopped sales going through and has left many people stuck in their current property, unable to move up the ladder.”
He continued; ‘Policy-makers need to look at how the market functions and find ways to increase fluidity in the system. Everyone will gain if we can open the floodgates on the supply of properties and loosen up the market so it is easier and more cost effective for people to buy and sell.’
For anyone struggling with negative equity, the fall in housing transactions could be a serious worry as a fall in demand could make their property worth even less and make it harder to sell, if they are planning to downgrade.
If you’re worried about the effect of negative equity on your finances, call our expert team on 0161 631 2727, or contact us through our website, negativeequityuk.com.