Homebuyers struggle as sellers add stamp duty saving to the price

House prices have reached another record high as the market continues to defy expectations, boosted in part by the stamp duty holiday, but the frenzy has left many would-be buyers behind.

Despite the launch of a government guarantee scheme for 95% mortgages, owning a home is now further out of reach than ever for some people due to the rapid rate of property price growth recorded over the past 12 months.

According to the latest data from the Land Registry, the average price of a home in the UK hit an average of £234,474 in May, which outstrips the stamp duty saving in many parts of the country.

Keller Williams UK points out that the average 15% mortgage deposit has climbed by £11,000 in some areas of the UK market, when compared to June of last year, which is when the stamp duty holiday first launched.

At £234,474, the current UK average house price requires homebuyers to stump up £38,461 for a 15% mortgage deposit. This is £3,249 more than the average 15% deposit of £25,212 prior to the launch of the stamp duty holiday – a 9% jump.

The South West is the region to have seen the largest monetary jump in the average cost of a deposit, up £4,196 since the start of the stamp duty holiday.

The South East has also seen an increase of more than £4,000, closely followed by the East of England (£3,498) and London (£3,180).

At local authority level, Hammersmith and Fulham has seen the largest jump with the average 15% deposit climbing by £11,458 when compared to June of last year.

The initial cost of buying in Elmbridge (£11,223) and Haringey (£10,052) has also climbed by more than £10,000 as a result of the stamp duty holiday, with homebuyers in Rutland (£9,641) and Stratford-on-Avon (£9,236) also facing a considerably tougher task.

The CEO of Keller Williams UK, Ben Taylor, commented: “The stamp duty holiday is now effectively over for all but those in the final stages of a transaction due to the long market delays that have accumulated at the back end of the process.

“Much like a night out when you have work the next day, it certainly seemed like a good idea at the time, but current homebuyers will be wondering if it was really worth it given that they now face a considerably larger financial hurdle to homeownership.

“This reduction in affordability has been felt right across the UK with southern regions seeing the largest monetary jump, while those in the north are facing the highest increase versus what they were paying previously.

“While the end of the stamp duty holiday will no doubt bring a natural correction to an otherwise overheating market, it’s unlikely to cause prices to crash and so the cost of buying looks set to remain a tough ask for those yet to climb the ladder.”

 

Table shows the current average house price and the cost of a 15% mortgage deposit versus the average house price in June 2020 when the stamp duty holiday launched
Location AveHP June 2020 Average deposit June 2020 (15%) AveHP March 2021 Average deposit March 2021 (15%) Change in deposit £ Change in deposit %
North East £129,432 £19,415 £145,893 £21,884 £2,469 13%
Yorkshire and The Humber £168,083 £25,213 £188,575 £28,286 £3,074 12%
North West £168,932 £25,340 £187,924 £28,189 £2,849 11%
South West £259,679 £38,952 £287,650 £43,147 £4,196 11%
Wales £167,653 £25,148 £185,431 £27,815 £2,667 11%
East Midlands £199,061 £29,859 £219,950 £32,993 £3,133 10%
West Midlands Region £201,785 £30,268 £220,982 £33,147 £2,880 10%
South East £321,884 £48,283 £348,615 £52,292 £4,010 8%
East of England £291,736 £43,760 £315,059 £47,259 £3,498 8%
Scotland £154,871 £23,231 £166,566 £24,985 £1,754 8%
Northern Ireland £140,841 £21,126 £149,178 £22,377 £1,251 6%
London £479,107 £71,866 £500,310 £75,047 £3,180 4%
England £250,865 £37,630 £274,615 £41,192 £3,563 9%
United Kingdom £234,747 £35,212 £256,405 £38,461 £3,249 9%
Data sourced from the Land Registry UK House Price Index – June 2020 to March 2021 (latest available data)
Mortgage deposit cost based on the average mortgage deposit of 15% applied to the average house price at both points in time (Source: Trussle)
Table shows the areas of the UK to have seen the largest £ increase in the cost of a mortgage deposit as a result of the stamp duty holiday
Location AveHP June 2020 Average deposit June 2020 (15%) AveHP March 2021 Average deposit March 2021 (15%) Change in deposit £ Change in deposit %
Hammersmith and Fulham £728,128 £109,219 £804,517 £120,677 £11,458 10%
Elmbridge £587,142 £88,071 £661,964 £99,295 £11,223 13%
Haringey £540,014 £81,002 £607,029 £91,054 £10,052 12%
Rutland £297,486 £44,623 £361,762 £54,264 £9,641 22%
Stratford-on-Avon £292,268 £43,840 £353,840 £53,076 £9,236 21%
Data sourced from the Land Registry UK House Price Index – June 2020 to March 2021 (latest available data)
Mortgage deposit cost based on the average mortgage deposit of 15% applied to the average house price at both points in time (Source: Trussle)
Table shows the areas of the UK to have seen the largest % increase in the cost of a mortgage deposit as a result of the stamp duty holiday
Location AveHP June 2020 Average deposit June 2020 (15%) AveHP March 2021 Average deposit March 2021 (15%) Change in deposit £ Change in deposit %
Carmarthenshire £146,488 £21,973 £183,129 £27,469 £5,496 25%
Manchester £172,625 £25,894 £211,107 £31,666 £5,772 22%
Oadby and Wigston £225,760 £33,864 £275,165 £41,275 £7,411 22%
East Renfrewshire £209,085 £31,363 £254,649 £38,197 £6,835 22%
Rutland £297,486 £44,623 £361,762 £54,264 £9,641 22%
Data sourced from the Land Registry UK House Price Index – June 2020 to March 2021 (latest available data)
Mortgage deposit cost based on the average mortgage deposit of 15% applied to the average house price at both points in time (Source: Trussle)
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8 Comments

  1. Property Poke In The Eye

    Homebuyers need to step back if they want to see the market drop.

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  2. Ian Narbeth

    Well, who would’a thunk it? Government temporarily reduces high SDLT rates and sellers increase their prices. Didn’t see that coming. Nope. Definitely a surprise to the Minister and civil servants.

    So “owning a home is now further out of reach than ever for some people due to the rapid rate of property price growth recorded over the past 12 months”. The more people are encouraged to “get on the housing ladder” the more prices will rise. Indeed people only want to get onto the “ladder” to get some “free” equity by prices rising. Nobody would take out a 75% loan if they thought the house/flat would be worth the same or less than they paid for it in 5 years’ time. Trouble is with interest rates so low, very large (relative to income) mortgages are available.

    Expect more Government interference which will push up costs even further and not solve anything.

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  3. GudeHG

    Will be interesting to see if this settles down over the next year. Demand for homes is still much higher than supply!

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  4. WatchingwithInterest

    I don’t know any vendor that has stepped back worked out how much the buyer is saving and added it to the price!!

    The headline is nonsense!!

    The market had started to heat up before the stamp duty holiday and prices are controlled by supply and demand. Most houses are getting multiple offers and as they are prepared to offer more agents are encouraging vendors to try a higher price. That is how the market works.

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  5. PeeBee

    Whoever came up with this headline has cracked the secret of writing complete, utter b0110cks.

    Congratulations – you may consider yourself a Master of the art.

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  6. paulgbar666

    There is simply too much demand for houses.   However there is too little demand for flats.   Wonder why!?  Only a mug would attempt to buy a flat.   It is highly likely that a lender would refuse to lend for a flat purchase. If flats were mortgageable that would take the heat out the housing market.   The flat market needs to be made viable.   That will require about £60 billion to be used for remediation of all the dud flats caused by poor construction and cladding issues   It will take decades for the flat market to recover. This will mean that houses will substantially increase in value.   If leaseholders don’t receive full unpayable by them assistance; there will be millions of bankrupted flat owners. The effects of dud flats on the property market as a whole don’t bear thing about.   Ultimately it could cause a run on the banks when it is realised the banks hold mortgages on effectively millions of worthless flats.    
    The dud flat crisis is far worse than the dud mortgage market that caused the GFC.
    The UK will have it’s own GFC if it doesn’t sort out the dud flat problems.   

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    1. PeeBee

      “However there is too little demand for flats.   Wonder why!?  Only a mug would attempt to buy a flat.   It is highly likely that a lender would refuse to lend for a flat purchase. If flats were mortgageable that would take the heat out the housing market.   The flat market needs to be made viable.”

      Complete, upper b0110cks.  And here’s why.

      According to Rightmove, there are 230,589 flats currently on the market in the UK.  Of those, 113,422 of them are listed as “Under Offer”/”SSTC”.

      That is 49.2% of the total number of UK listings currently in various stages of buyers doing exactly the opposite of your ridiculous post.

      The only thing I will concede is that it is a significantly lower percentage than houses and bungalows, for which sales agreed currently run at s gnat’s chuffhair under 74%.

      But there is a small pr!ck of light at the end of the tunnel for you, paulgbar666.  The great (for you) news is that according to the same source, only 33.5% of park homes are currently spoken for.

      So I would (dis)respectfully suggest that you redirect your woefully misplaced – and embarrassingly inaccurate – efforts to damage what is obviously a very healthy market for flats in the direction of static caravans, and try to spread your venom where it may appear more relevant.  You’ll still be woefully wrong – but at least the figures are slightly more in your favour.  Play to whatever advantage you can find – making it up as you go along isn’t working for you.  At all.

      Sorry, chum – but it has to be said…

      …113422 (and rising) “mugs” are making you look a proper gripper.

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      1. paulgbar666

        Never have I read so much twaddle.   You clearly have no idea on how the cladding and construction problems could affect the whole of the UK property market.   Such naivety is truly breathtaking.     You could not pay me to buy a flat. I have 4 flats to offload to mug buyers.   I just hope such mugs believe as you do do so I can offload my dud flats at full retail price so that I can invest in one 4 bed house.   It simply beggars belief that those in the industry have so little understanding of the ramifications of dud flats.     .

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