Stamp duty cuts introduced by the government last week could be wiped out within a month, due to rising house prices, says HBB Solutions.
He also lifted the threshold that first-time buyers begin to pay this tax to £425,000 from £300,000. And increased the value of the property on which first-time buyers can claim relief to £625,000 from £500,000.
This move means that the average homebuyer is due to save £2,500, but an “overheated housing market” could erase this benefit within 30 days, according to a study from the chain-repair property buyer.
The firm looked at the current rate of house price growth over the last year, with the data showing a 16.4% annual increase, or an average growth rate of 1.4% a month.
The average price of a house in England is currently £311,583, which means that the value of this home is set to jump by £4,251 a month.
The report says: “While homebuyers will still see a stamp duty saving when purchasing, the current benefit of this saving in today’s market will have been wiped out in a single month.
“In fact, even when taking the £2,500 saving into account, homebuyers will still be paying a further £1,751 on top compared to the current cost of purchasing a property.”
It adds there are currently five regions where homebuyers stand to make the maximum stamp duty saving as a result of last week’s cut – London, the East of England, the South East, South West and West Midlands.
But based on house price growth over the last year across each region, all five are due to see the cost of a home increase by more than £2,500 in a month.
In London prices are expected to rise by £4,145 a month, the East of England by £4,773, the South East by £5,256, the South West by £5,697 and the West Midlands by £2,794.
While the stamp duty saving for average homebuyers is lower across the remaining four regions of England, house prices across all four have still climbed by thousands of pounds a month over the last 12 months, which would still see the current stamp duty saving cancelled inside a month.
HBB Solutions managing director Chris Hodgkinson says: “Those lucky enough to be in a position to buy a property will, of course, welcome today’s news and the savings being handed down to them.
“However, the market is already overheating at an alarming rate and the reality is that the home they are currently in a position to buy will cost them thousands of pounds more by this time next month.
“So, while they will still save on the cost of stamp duty when they do buy, the price they will be paying upfront will have consumed this saving and then some.
“Proof, if it were ever needed, that demand focussed housing initiatives do little more than grab headlines, at the detriment of the nation’s hard-pressed homebuyers.”
