House prices rise but changes to stamp duty affect £1 million-plus properties
Average house prices have continued to rise but changes to stamp duty has had an impact on higher-value properties, according to the latest data for England and Wales.
Average house prices rose by 5.3% in the year to September 2015 and the average price of a house now stands at £186,553 – £9,254 more than it was a year ago, the Land Registry House Price Index for September has revealed.
The Land Registry’s index, which is the only one based on actual sold prices, also showed that London properties had a monthly increase of 1.8%, as compared to 1% in England and Wales. The annual change for London stands at 9.6% – considerably higher than most other regions.
The average price of property in London is £499,997 – £136,556 more than the average for England and Wales. The London borough with the highest annual price rise was Newham – up by 13.6% – while properties in Hounslow showed the slowest annual growth at 2.1%.
Outside London, the North East saw the only annual price decrease of 0.3%, with Darlington showing the most significant annual price fall, dropping by of -5.1%.
Impact of changes to stamp duty
New stamp duty rules at the turn of the year, whereby properties sold for between £925,000 and £1.5 million are taxed at 10% and those over £1.5 million are taxed at 12%, had an impact on the number of properties sold in these price brackets.
The number of properties sold in England and Wales for more than £1 million dropped by 9% to 1,413 from 1,555 in the year from July 2014.
The number of properties sold in London for more than £1 million in July 2015 fell by 16% to 884 from 1,057 in July 2014.
On a positive note, the number of properties that were repossessed from April to July 2015 averaged 519 a month. This is a considerable drop compared to the same period a year earlier, when they averaged 932 a month.
Jonathan Adams, director of prime central London estate agency Napier Watt, said: “The Land Registry House Price Index recorded a modest monthly rise in the national average price in September. However, the number of property transactions decreased, suggesting that the market is perhaps not as healthy and functioning as well as it could be.
“The breakdown of transactions by price range is revealing, highlighting a fragmented market in London with higher-value properties struggling to sell. There were 288 £2 million-plus purchases in July 2015, compared with 370 in the same month last year. But in the £1 million to £1.5 million range, the number of transactions rose from 821 in July last year to 840 this year, underlining the impact the increase in stamp duty on purchases over £2 million has had on the market.
“Buyers are being more cautious: properties that are nicely finished and realistically priced are being snapped up, even under sealed bids, while those that are overpriced and not that special are lingering.”
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
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