The government’s decision to introduce stamp duty land tax (SDLT) reforms 12 months ago has had an adverse impact on the overall housing market across England and Wales, fresh research shows.
Analysis of data from Land Registry and Zoopla reveals that the number of homes changing hands has fallen by almost a fifth - 19% - across England and Wales and by as much as 35% in London, as the government’s 3% stamp duty surcharge on second homes deters many investors from buying property.
The most significant slowdown in activity was unsurprisingly witnessed at the top end of the market, with the vast majority of listed properties valued at more than £500,000 remaining unsold, the study by Nested found.
Only 9% of properties above £2m are currently under offer, while just 18% of properties between £1m and £2m are currently under offer.
This compares poorly to properties priced less than £500,000, of which 41% are currently under offer across the country, indicating that the lower end of the market, as expected, is functioning much more efficiently than the higher end.
The research also found that while demand for London’s higher valued properties - most notably in the west of the city - has slowed, the more affordable east of the capital remains a hotspot, fuelled by greater demand from first- time buyers and second steppers.
Matt Robinson, CEO of Nested, commented: “The evidence is now crystal clear – the government’s SDLT reforms shattered the property market.
“In the 12 months since the 3% surcharge was introduced, national property transactions fell 19% across the country and a massive 35% in London. Anything above £500,000 outside of the capital just isn’t selling.
“Brexit hasn’t helped the situation but the data shows that the government’s stamp duty tinkering has stalled the market. This may have slowed rising house prices, but it has also stopped sales going through and has left many people stuck in their current property, unable to move up the ladder.
“Policymakers need to look at how the market functions and find ways to increase fluidity in the system. Everyone will gain if we can open the floodgates on the supply of properties and loosen up the market so it is easier and more cost effective for people to buy and sell.”