Zoopla has given its take on how this week’s Budget may affect first time buyers.

It says that today, FTBs do not have to pay any stamp duty on properties that cost up to £425,000 and pay partial stamp duty on homes up to £625,000 (England and Northern Ireland only). Currently, we estimate that 80 per cent of FTBs pay no stamp duty, with 14 per cent paying partial duty. 

This support for FTBs is set to end in April 2025, unless reversed in the Budget. A return to previous thresholds would result in an additional 20%of FTBs being liable to pay stamp duty and a further 14% would be required to pay a partial amount.  

The impact of a return to previous thresholds would be more keenly felt in southern England where the average FTB in London and the South East would pay £5,600 and £1,390 respectively, compared to £0 today. 

In parts of London such as Camden, Hammersmith and Fulham and Islington with average house values over £600,000, FTB could pay an additional £15,000 in stamp duty. Faced with higher buying costs, FTBs will want to pay less for homes in these areas which will keep price rises in check.

Richard Donnell, Executive Director at Zoopla comments:“First-time buyer numbers have recovered as mortgage rates have fallen but a sizeable deposit is still required to buy. Possible changes to stamp duty relief will only create further barriers to ownership for this group who already face significant affordability constraints.

“The housing market doesn’t need short term policy tweaks from the Budget. The health of the housing market and people’s ability to afford housing is linked to the health of the economy. It’s vital the Budget is focused on economic growth and expansion in jobs and rising incomes. The primary focus should be on providing the financial support and investment needed to help build the homes the nation needs for buyers and renters.”

More generally, the latest House Price Index from Zoopla suggests that 2024 will turn out to be a bumper year for house sales. 

Rising incomes combined with average mortgage rates at their lowest for two years, have resulted in the highest level of new sales since late 2020.

Comparatively, house prices are rising slowly, up by just 1% over the last 12 months, compared to a fall of 0.9% a year ago. Price inflation is being held back by a large choice of homes for sale and affordability pressures which are keeping buying power in check. 

In more affordable areas, house prices are rising at an above-average rate for example the North-East (2%), Yorkshire & Humberside (2%), North-West (2.3%), Scotland (2.4%) and Northern Ireland (5.6%). Conversely, house prices are down slightly in Eastern England (-0.3%) and the South-East (-0.1%). 

UK-wide average house prices remain on track to be 2% higher over 2024 as price falls from this time last year drop out of the annual rate of price inflation.

Sustained growth in new sales over 2024 has led to the largest sales pipeline the market has seen for four years. 

Zoopla’s analysis reveals that there are currently 306,000 homes working their way through the buying process to completion, 62,250 (26%) more than 12 months ago. The total value of these sales has hit £113 billion, 30% higher than this time last year when a spike in mortgage rates hit buyer demand and reduced the number of sales agreed over 2023 H2.

Momentum in new sales remains strong and looks set to continue into December, supported by a high supply of homes for sale. Many of the most recent sales will complete in the first half of 2025.

The growth in sales is being driven by a combination of first-time buyers and existing homeowners who have delayed moving decisions until borrowing costs fell and the outlook improved. FTBs are set to be the biggest buyer cohort in 2024, accounting for 36 per cent of all sales followed by existing homeowners (31%), cash buyers (27%) and landlords buying with a mortgage (7%). 

The portal says the rapid growth in rents and the decline in mortgage rates have shifted renting versus buying dynamics, supporting more first time buyer purchases. The average mortgage repayment for a typical UK FTB home is 17% cheaper than renting, compared to a much smaller 2% difference a year ago when mortgage rates were higher.