As 2006 draws to a close, house prices in the South West have increased by 17.4%, while the National annual house price has increased by 12.4% according to Rightmove’s house price index. (Rightmove’s house price index takes a sample from 75% of the UK’s property, more accurate than Halifax and Nationwide house price index that are seasonally adjusted).
One of the main reasons for the increases is a shortage of supply and the buoyant buy to let market pushing property prices above market expectations.
First time buyers are being pushed out of the market as the average age for first time buyers is now thirty two years and therefore have to rent fuelling the buy to let market.
As house prices increase, paying stamp duty is now the norm rather than for the privileged few and a third of properties are marketed over £250,000, where at least £7,500 has to be set aside for tax. For properties above £500,000, stamp duty is currently 4%, at least £20,000 in stamp duty tax. The growing tax burden on property transactions is not just limited to stamp duty tax. Over 25% of properties are now priced above the inheritance tax threshold of £285,000. Stamp duty tax is charged between one and four percent, whist inheritance tax is levied at 40%, although only on anything above the £285,000 threshold.
James Scollard from Clifftons Estate Agents comments “The increases look set to rise further, despite the recent rise in interest rates to 5%. In October, the amount of properties for sale per estate agent is at their lowest levels this year causing an under supply and higher demand.”
Posted: 21st November 2006