Asking prices for British homes rebound on tax cut

Overhaul of property-tax system lowers costs for prospective buyers as general election looms

PUBLISHED : Wednesday, 21 January, 2015, 6:00am
UPDATED : Wednesday, 21 January, 2015, 6:00am

Asking prices for homes in Britain rose this month as an overhaul of the property-tax system lowered costs for prospective buyers.

Average prices increased 1.4 per cent from December to £273,275 (HK$3.2 million), snapping two months of declines, according to property website Rightmove. Values sought in London rose 0.9 per cent to £566,404.

A change to stamp duty, a tax on home buying, was among the giveaways from Chancellor of the Exchequer George Osborne last month as his Conservative Party courts voters before May's general election. A lack of supply is also supporting prices, with stocks of property for sale down 10 per cent from a year earlier, Rightmove said.

The tax change may be "the spur for people making New Year resolutions to get on with moving", Rightmove director Miles Shipside said. "We are only a few days into the year and it remains to be seen whether this initial flurry is sustained."

Prices across England and Wales rose 8.2 per cent from a year earlier. Seven of 10 regions tracked by Rightmove showed increases, led by a 3 per cent jump in the southwest.

The marginal increase in London followed a 2.1 per cent decline in December and left average prices in the capital 12.8 per cent higher than a year earlier, Rightmove said.

On the month, gains were driven by inner London boroughs, with asking prices jumping 14.1 per cent in Merton and 10.1 per cent in the City of Westminster. Prices fell in outer districts, with a 9.1 per cent decline in Richmond-upon-Thames.

Across Britain, the number of properties for sale per real-estate agent dropped to 57 in December, the latest month for which data is available, from 64 the previous month. The number of days taken to sell a property increased to 79 from 72.

In a separate report, the Ernst & Young Item Club said falling oil prices will push average inflation close to zero this year while economic growth picks up to 2.9 per cent, compared with a forecast in October of 2.4 per cent.

"Not every economy will be a winner from oil prices collapsing, but the UK certainly is," said Peter Spencer, chief economic adviser. "While it is not a game changer in terms of growth prospects, falling oil prices come just as the recovery was losing momentum and will move the game up to a higher level for a year or two."

Britons head to the polls on May 7 with surveys showing neither Prime Minister David Cameron's Conservatives nor the Labour opposition is on course for a parliamentary majority. Osborne's stamp-duty revamp will save the average homebuyer in Britain £4,500, according to the Treasury. Only buyers of homes costing more than £937,000 will see their tax bill go up.