Stamp duty holiday only having modest impact in Wales

24 November 2020 | General

The government’s stamp duty holiday is only having a modest impact in Wales, according to Principality Building Society’s chief risk officer Mike Jones.

In Wales, the Land Transaction Tax (LTT) concession introduced in July moved the threshold from £180,000 up to a new level of £250,000 until 31 March 2021, worth a maximum of £2,450 to people who buy a property for this price.

Jones said: “Given the relatively low savings that can be obtained on the LTT duty in Wales, we do not consider the impact of the temporary rate will be as significant as it appears to be in England’s housing market.

“The temporary LTT holiday in Wales does not apply to second homes or buy-to-let properties, where an additional rate of 3% remains payable.”

He was speaking after Principality launched its Wales House Price Index.

The index found that house prices have risen by 3% to £196,165, though property sales were down by 58% between April and September compared with the same period in 2019.

Jones added: “Although it might appear to be somewhat implausible to be reporting rising prices in the middle of a pandemic, we believe this reflects the increase in demand following the Q2 lockdown.

“It is also potentially the desire for a lifestyle change for some who during lockdown have realised that it is possible to work from home, avoiding the necessity to travel to work on a daily basis.

“The demand for larger homes with additional space, including outdoor areas, has consequently risen however, and with little new supply coming to the market, prices also rose rapidly.

“In terms of outlook for the market, the extension of the furlough scheme and mortgage payment deferral scheme could, in the short term, help offset the impact of weakening economic performance.

“However, many experts continue to forecast a rise in unemployment during the coming months and that will inevitably impact consumer confidence and the housing market.”

In September six local authorities in Wales – Bridgend (£190,948), Cardiff (£247,030), Carmarthenshire (£172,708), Gwynedd (£198,279), Newport (£213,660) and Powys (£222,992) reached a new record average house price.

During Q3, the area with the highest increase in average house price was Gwynedd, which rose by 14.6%.

In Gwynedd the price of detached homes increased from an average £250,000 during Q2 2020 to £280,000 during Q3 2020, however this increase in value was assisted by the sale of the area’s highest priced detached home of the calendar year at £1.2m.

This post has originally been featured in Property Wire.