Will house prices drop after stamp duty increase?

[topsocks]

Will houses currently on the market have to lower their asking price because of the stamp duty increase?

No

potentially

I would think so, probably. At least in this area property is hanging around for months. People are finding it a stretch to buy. If they are suddenly going to be paying a lot of Stamp duty they are going to want to reduce their offers further to make up for that.

Unlikely

Why?

Nothing ever makes house prices drop round here. (Commuter town on tube line)

Not noticeably no, they’re more likely to drop because of higher interest rates. Have also noticed a lot more hanging around locally but that’s usually because they were so overpriced in the first place

I doubt it. If they do people will withhold selling them even more. There is hardly anything in stock. Renting is much more expensive now so people are desperate to buy in my circle of friends.

I've said it before and i'll say it again.

In the long term, property always increases in value.

In the short term, it might increase or it might decrease.

My guess is buyers will offer a slightly reduced price due to the stamp duty change, the reverse of what happened during the COVID stamp duty holiday?

I doubt there is going to be a sudden rush of sellers reducing their asking prices overnight. But it may be that there are fewer buyers around for a time so sellers have to be more flexible in negotiations.

This.

I'm going to say no. Because people won't sell their house for a loss. So if they don't need to move they won't, and then as house prices would increase over time as they do anyway- the answer will be no.
Just further to this I completed on my new house in December paid over 500k next door neighbour puts house on market Feb, very similar design/layout but has newer bathrooms and this sale won't be completed before the stamp duty change- they have sold for almost 600k. So it's not happening yet...

There is such a housing shortage that I think not but I am no expert.

Also people just do not want to sell at a loss even if they then buy cheaper. It’s a mindset.

Maybe. It depends on their individual market and house and whether they really need to sell or are just 'testing the market'.

The raising of the SDLT will definitely tend to put downward pressure on prices overall, but particularly FTB type properties, unless the government introduces some new wheeze (they are clearly trying to). Most people wouldn't be selling their home at a loss but a few have already done so ((I've seen a small number of local examples). It just depends how much people need to sell.
Some areas will hold up better, if there is less available for sale. In others, there is plenty for sale. Nationally, there isn't a low inventory nor a housing shortage.

The outlook for the economy isn't good and there has been an increase in job losses already. This will tend to put more downward pressure on pricing but it happens gradually. Ditto is we have a big stock market crash. We may well also see interest rates needing to rise again in the next few years. These things should be much more of an overall concern for those wondering about house prices.

I don’t quite agree with that.

We’ve sold at a loss before in the early 1990s and didn’t actually mind because we were upsizing so understood that while our property had reduced in price by a certain percentage, so too had the more expensive house we were buying.

So overall we could afford a better house than if prices of both properties had risen.

I think as the PP mentioned, this will come down to how much people need / want to move. I think we are already seeing issues with market fluidity as the cost of moving and affordability has been stretched for a couple of years now. The rise in SDLT will add more pressure at the bottom due to the loss of FTB benefits. Further up chains, a couple of grand is less likely to be impactful but if you don't have FTBs, you don't have onward sales. I think those whose reason to move is less pressing may end up withdrawing from the market. When we were looking last year, we saw quite a few properties being withdrawn after not achieving a sale. I think we may see more of that rather than price reductions.

Just more stagnation in the housing market then… unless the government intervenes to incentivise FTBs.

I doubt it - house prices are so high nowadays, stamp duty is really just a drop in the ocean. I admit it sounds mad, but even if the increase is 10k on a £600k house and you reduce your offer accordingly, it doesn't really add up to enough to count as a fall in the house price.
It always tends to make a difference if you are selling at a boundary point - so anyone trying to sell at 250k would expect to accept an offer under that point (although the FTB boundary at 300 might actually soften that pressure). But apart from that, I think everyone will just plod on as always.

Also people just do not want to sell at a loss even if they then buy cheaper. It’s a mindset.

Thats a bit odd, it's normally easier to upsize in a falling market.

That's how I see it. I think the market will continue to stagnate without meaningful incentives or improvements in the cost of living. And it's hard to see where they will come from. The leasehold conversation in the news today is interesting, but unlikely to come to fruition any time soon.

Just checked it on the BBC website - that’s a good thing the Labour government are doing I think.

Affordability does matter & things take a while to play out & of course inflation.

I posted this on another thread but was surprised to read it.

"In the past decade, London house prices have increased by just 13 per cent — that amounts to a 16 per cent fall in real terms."

It's not a huge difference for a non FTB buying a relatively expensive house (600k being well above the average house price) but it is significant for some FTBs. Someone can probably give the exact figures but I think some would be expected to find well over £10,000 upfront in cash. That's a figure that could easily cause sales to fall through, offers not to be made or to be made lower.