Buying now may well mean paying over the odds
For house hunters, the stamp duty holiday may seem like a huge win.
Freed from paying up to £15,000 in tax, those buying property now can make big savings and use that for improvements to their new home – all while boosting the economy.
But there’s a danger that those who race to buy now may end up paying over the odds, cancelling out their stamp duty saving.
As a result of Chancellor Rishi Sunak’s move, the market has been whipped into a frenzy. New figures from property website Rightmove show that asking prices are now 2.4pc higher than they were in March, before lockdown. Estate agents in some parts of the country report instances of gazumping and buyers offering way over asking price.
The current balance of power in the market lies with sellers. As demand rises due to the tax cut, and is boosted by the fact that it is a time-limited holiday, competition grows. To get a purchase completed in time for the deadline in March, sales need to be agreed by the end of this year, so buyers are in even more of a hurry than the time frame suggests. Add to that a dearth of property for sale – Rightmove says that it is down 13pc on a year ago, which was already at a low level – and buyers risk being trapped in a sellers’ market.
Some estate agents selling high-end homes have reported that sellers now expect to “share” the stamp duty cut and so have hiked prices, demonstrating where the power currently lies in negotiations.
Buying property now also comes with the caveat that analysts expect property prices to sink in the last months of this year or in early 2021, as the holiday comes to a close, and the economic fallout of the pandemic bites.
While it’s great to get the market moving again, buyers need to be savvier than ever before.
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