Some first-time buyers ‘rushing to beat stamp duty deadline as others pause’

From April 2025, stamp duty rates will revert to previous levels, with the “nil rate” band for first-time buyers reducing from £425,000 to £300,000.

Property website Rightmove said first-time buyers in higher-priced areas of England are set to be particularly affected.

Its analysis suggests that in London, only 8% of homes for sale will be stamp-duty free for first-time buyers from April, with the percentages estimated at 24% in the South East and 32% in the East of England.

Rightmove said these areas have seen an uptick in first-time buyer demand since the autumn Budget, suggesting some first-time buyers are rushing to avoid paying higher charges.

Before the Budget, first-time buyer demand in London was 28% ahead of last year but this has now increased to being 31% ahead.

In the East of England, the trend has moved from 28%, to 32% ahead of the same period last year since the Budget, and in the South East, first-time buyer demand has ticked up from 23% ahead of last year pre-Budget, to 24% ahead post-Budget.

Demand was measured by the volume of inquiries being sent through the website to estate agents.

Rightmove said that, across Britain, it currently takes five months on average to complete a property transaction after agreeing a sale, so first-time buyers would need to be particularly swift to complete purchases before the April 1 stamp duty changes.

Stamp duty applies in England and Northern Ireland.

Rising stamp duty charges are likely to have less impact in areas where there is already a wide availability of homes below the £300,000 threshold, Rightmove said.

Tim Bannister, Rightmove’s property expert said: “With stamp duty thresholds in England lowering from April, we’re seeing early signs of first-time buyers reacting.

“In London and higher-priced areas, where first-time buyers are most likely to be affected, we’re seeing some pull forward their plans to try and avoid higher charges.

“In most other areas of England, which have a greater availability of stamp duty-free homes for first-time buyers, we’re seeing the opposite trend of some first-time buyers taking a pause for breath.”

The figures were released as Halifax said its analysis indicates that, among buyers generally, buying a home has become slightly more affordable relative to income, with the average house price-to-earnings ratio easing to 6.55, down from 6.62 last year.

Wage growth outpacing house price inflation was behind the improvement in affordability.

The average house price-to-earnings ratio has been steadily reducing since it reached a peak of 7.24 in the summer of 2022, Halifax said.

The analysis, using data from the Halifax house price index, found UK house prices have increased by 3.8% compared with a year ago, reaching an average of £292,508.

Meanwhile, annual earnings for full-time workers climbed by 5% to an average of £44,667, over the same period, Halifax said.

Amanda Bryden, head of Halifax Mortgages, said: “Housing affordability has improved over the past year, thanks to stabilising property prices, strong
wage growth, and easing interest rates.

“That’s great news for first-time buyers and existing homeowners looking to remortgage or move up the property ladder.

“However, while homes are becoming more affordable, the progress has been gradual. Buying a property remains a significant challenge for many, with prices still near record highs and interest rates likely to stay higher than we’ve been used to over the past decade.”

Despite the overall trend, Halifax said that house prices in some parts of the UK have become less affordable than a year ago, with Northern Ireland experiencing the biggest increase in the house price-to-earnings ratio from 4.88 last year to 5.09.

This has been driven by a substantial 10% rise in house prices, Halifax said.

In England, the North West, South East and Yorkshire and the Humber also saw an increase in their average house price-to-earnings ratios, meaning homes have become less affordable relative to income, the report said.

Although London has the highest average house price in the UK, at £539,238, its house price-to-earnings ratio of 8.22 is lower than the South East, which sits at 8.96.

The North East of England was identified as the most affordable region, with a house price-to-earnings ratio of 4.38, down from 4.56 last year.

At a local level, Hull in Yorkshire was identified by Halifax as the most affordable area of the UK, with an average house price-to-earnings ratio of 3.15.

This is followed by Burnley and Blackpool in Lancashire, with ratios of 3.20 and 3.34 respectively.

Elmbridge in Surrey was identified as the least affordable local area, with a house price-to-earnings ratio of 17.54. St Albans in Hertfordshire was ranked second with a ratio of 13.96, followed by Kensington and Chelsea in London at 13.93.

Here are the average house price-to-earnings ratios in the third quarter of 2024, according to Halifax:

Eastern England,  7.95

East Midlands, 5.97

London, 8.22

Northern Ireland, 5.09

North East, 4.38

North West, 6.02

Scotland, 5.08

South East, 8.96

South West, 7.52

Wales, 5.63

West Midlands, 5.70

Yorkshire and the Humber, 5.42

And here are the 10 most affordable places in the UK with their nation or region and average house price-to-earnings ratio, according to Halifax:

1. Hull, East Yorkshire, 3.1

2. Burnley, North West, 3.2

3. Blackpool, North West, 3.3

4. West Dunbartonshire, Scotland, 3.4

5. Dumfries and Galloway, Scotland, 3.4

6. Stoke-on-Trent, West Midlands, 3.4

7. South Tyneside, North East, 3.5

8. East Ayrshire, Scotland, 3.5

9. Dundee, Scotland, 3.5

10. North Ayrshire, Scotland, 3.5

And here are the 10 least affordable areas of the UK identified by Halifax:

1. Elmbridge, South East, 17.5

2. St Albans, Eastern England, 14.0

3. Kensington and Chelsea, London, 13.9

4. Waverley, South East, 13.5

5. Sevenoaks, South East, 13.1

6. Mole Valley, South East, 12.8

7. Windsor and Maidenhead, South East, 12.5

8. Hertsmere, Eastern England, 12.1

9. Guildford, South East, 11.5

10. Epping Forest, London, 11.5