Stamp duty indecision causing sales to drop
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- Published:Tuesday, August 19th, 2008
A survey of members conducted by the National Association of Estate Agents (NAEA), has produced one of the largest responses from estate agents with over 1350 replies demonstrating what a contentious issue the recent stamp duty ‘announcement’ is and the effect it has had on the property market.
Alarmingly, just a week since the announcement the results indicate that 25% of agents now claim that a sale has fallen through as a direct result of the Chancellors comments. Whilst a staggering 92% of agents believe the Chancellors remarks have increased consumers concerns.
Over the past four days members were asked a series of questions relating to the recent speculation that the Chancellor may grant a stamp duty holiday in Autumn. The results clearly demonstrate agent’s strong feelings on how this situation has been handled and the impact this has had on the market to date.
Peter Bolton King, Chief Executive of the NAEA comments: “Instead of the Government formulating a careful plan outlining their thoughts clearly and concisely with a clear time frame in mind, this comment was simply made off-the-cuff. This is not particularly helpful in the current climate. It seems that there had been little regard to how this speculative comment might impact on what is already a delicate market. These figures clearly show the effect that this ‘loose’ statement has had on consumers and the property market as a whole, none of which are encouraging.”
The NAEA then went on to ask members ‘have any applicants asked whether they should buy now or wait to see what the Chancellor says in the Autumn Pre-Budget Statement’. 75% of respondents stated ‘yes’ whilst only 25% of agents said ‘no’.
A further question then asked ‘have any current purchasers asked whether they should buy now or wait and see to what the Chancellor says in the Autumn Pre-Budget Statement’. A worrying 62% of respondents answered ‘yes’ whilst only 38% of agents said ‘no’.
Peter continues: “I understandably have been taking a plethora of concerned calls from members, some of whom are already starting to feel the impact this comment has had on ready and waiting purchasers. The result being people who have already agreed to purchase a property are now asking what they should do. Consumers are confused and with this uncertainty transactions in the market have been and will continue to slow down. From past experience we know that announcements concerning future changes can have a dramatic effect on the entire market and can cause huge distortions. Already, consumers are adopting a wait and see attitude but the worry is how long will it last?”
Finally, when the respondents were questioned whether they think the Chancellor should wait until the Autumn Statement before making any further comment about helping the market a resounding 92% answered ‘no’ whilst a meagre 8% of agents said ‘yes’.
Peter concludes: “Whilst a stamp duty holiday, if immediately put into place, will of course help ease the woes of consumers temporarily, we continue to appeal to the Treasury to carry out a complete overhaul of stamp duty and put in place a complete package of measures. Consumers need reassurance and whilst a stamp duty holiday will help alleviate some financial pressures they are currently experiencing it will not help propel a resurgence in the market place in the long term. There are many factors facing the property market that need care and attention to help alleviate the problems consumers currently face, for example; liquidity, deposits needed for first time buyers and repossessions. The Government needs to turn its attention to all these factors not just one at a time.
“Clear and immediate decisions in this area need to be made. Sometime in Autumn is not good enough! The Government need to clear up this uncertainty as soon as possible to help minimise the disruption to the market place and help the British economy move forward. We would welcome the opportunity to meet with the Treasury to try and help overcome this problem.”
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Daniel has made a Comment
In response to your article.
Reducing or abolishing stamp duty for First Time Buyers will make absolutly no difference whatsoever.
I, and every other FTB whom I know, are not buying because prices are ridiculsoly, criminally high.
You have a vested interest in prices remaining high.
Let me ask you:
Houses on my street are presently priced at £239,500. Thanks to the Web, there are many sites where FTB’s can now look at the sold price dating back to 2000.
In 2002 those same houses were sold for £95,000.
In 2000 they were valued at £80k. And you think that we are not buying because of the cost of Stamp Duty?!!
Lets say we deduct £119,750 from that massively inflated price tag, so the property is reduced from £239,500 to £119,750 {a 50% cut}
The increase, from £95k in 2002, to £119,750 today, {an increase of £24,750k over 5 years, 2002-2007}would still be a much higher increase than the national long term average.
{ The national long term average being the average price rise, pro rated, over the history of the housing market for the last 30-40 years. }
In fact, this raise of £24,750k over just 5 years would be extreme.
Even if you halve the present £239,500k price tag, they are still MASSIVELY overpriced !! {Remember these houses were £80k in 2000} And this kind of increase is pretty normal across the whole of the UK.
If the EA think they can hang on, get away with a slow minimal reduction, over a couple of years, before they are living in cloud cuckoo land.
I was priced out in 2000, when I would go and look at a house, which subsequently, increased by £20k in just one year. At that stage, 2001, my natural reaction was not to jump on the band wagon quickly, rather to pull away, knowing it was not worth that much just a year later.
I could get a mortgate tommorow no problem. So could many many other FTB’s whom I know. WE ARE NOT BUYING BECAUSE THEY ARE RIDICULOSLY OVERPRICED. The thing is, the Estate Agents and lenders, and politicians, everyone everywhere in fact already know his. And all the waffle above is purely meant to distract us from that fact.
I will not be buying until they return to 2000-2001 prices. If they don’t fine.I rent half a fantastic house for £285 pcm. With a forty foot games room, £20k fitted bar, three garages, fitted bedrooms, antique snooker table etc.joiner fitted bedroom. Very nice area etc. garden.
The entire system with which EA use to value houses, is bankrupt. And Corrupt.
During the last 8 years, lenders offered 10x salary mortgages. However, we were living in a ‘false economy’. That is undisputed. We are now back to 3.5x salary motgages. The same as we were prior to 2001. The last time the market worked as it should do. However, EA have not reduced their prices to reflect this.
Roughly 40% of homeowners in the UK, own outright. The only movement in the market at the moment are existing owners ’swapping’ houses. Trading up or down.
The banks, the lenders, the CML, have lost tens of trillions of pounds, worldwide.
Its not the homeowners who set the market value. Its the people who trade in houses. With the amount of repossessions that are occuring, and will continue to occur, the banks, will need to sell their assets. Houses. Every FTB in the country has been waiting for years for this to occur.
The average reduction an EA expects to receive, as an offer on a house, in a normal market is 10%. The average on a repossessed house is 25%.
We all know they are massively overpriced.
Its robbery. Plain and Simple. It was always madness. EA prices are utterly ridiculos. Criminal. A bad Joke. Absolutely unbelievable. {And I used to work for a National House Building Company}I am so bitter after 8 years, I actually hope that a lot of EA end up homeless. That’s how bitter this has made me. I have lost tens of thopusands of pounds paying rent for the last 8 years. Far more than a lot of people who will go into negative equity will lose. And why? Because I didn’t believe the EA then. And I don’t now.
The CML should be in prison. And god knows where you come up with your fantasy island figures.
ITS OVER!!!!!!!
FTB 35 years old.
August 19, 2008 @ 12:04 pm