Politics can lay waste to the best of intentions and grandest of ambitions. Nowhere is this better illustrated at the moment than in New South Wales.
Incumbent Premier Dominic Perrottet has been something of a land tax zealot for many years, throughout his time as treasurer and when elevated to his current role.
It’s dangerous political territory to be seen as pro-tax, especially when that tax is on the family home.
Perhaps that’s why, with an election looming large just months away, his government bottled it on land tax reform.
Rather than Perrottet’s original grand designs of transitioning New South Wales away from stamp duty and onto land tax, his government passed a “reform” that retains the worst element of stamp duty with the biggest risk of a move away from it.
The government’s scheme, which took effect last week, allows first home buyers who purchase properties worth up to $1.5 million to either pay the existing stamp duty up-front or opt for an annual land tax for as long as they own the home.
It’s a potential gain for first home buyers, who can now opt out of the two or more years of saving typically needed just to gather the roughly $40,000 stamp duty on a million-dollar home.
And, in theory, most may also end up saving money.
Relatively few first home buyers end up living in their property for more than a decade, and 10 years of land tax on a million-dollar home where half the value is the land will likely be a tad over $22,000, or close to half the cost of stamp duty.
If that million-dollar home was an apartment, the savings would be much bigger still because, unlike stamp duty, the land tax is levied only on the land value, not including anything built on it. With apartments, the land value is split among many individual units.
The potential savings grow further when you factor in the effects of inflation on the real value of money over time, and the interest savings the home buyer can make by not having to effectively borrow their stamp duty from the bank.
However, when I say “may end up saving money” it’s because this theoretical calculation doesn’t account for the rise in prices the policy might induce.
As economist Cameron Murray argues, taxes like stamp duty are “economically incident on the seller” even when the buyer is the one actually paying them.
“Homebuyers are paying the maximum they are willing.
“Whether that payment is directed to home sellers, or the government via stamp duty or land value taxes, has no effect on the underlying property market dynamics of rationing via prices and the costs buyers will need to pay.”
In other words, if home buyers don’t have to pay stamp duty up-front, they can put that money towards bidding more for their preferred property.
Rather than benefiting first home buyers, Murray argues this type of scheme is likely to further enrich existing owners.
But if the government’s scheme carries this risk, the Labor opposition’s proposal is all but guaranteed to raise prices.
It plans to raise the current first home buyer stamp duty exemption threshold — instead of being able to buy a home worth up to $650,000 stamp duty free, that limit would be raised to $800,000, with a stamp duty concession for homes worth up to $1 million.
The reason this may push up prices even more is that it comes with no ongoing tax obligation. At least with the government’s scheme first home buyers, and their lenders, will need to factor in the ongoing land tax payments, reducing somewhat how much they can borrow and pay.
However, the most economically infuriating aspect of the NSW government’s “First Home Buyer Choice” policy, as it’s been branded, is inherent in its name — it only applies to first home buyers.
When those owners sell their first home, they do not get the choice of remaining on a land tax regime. They will have to pay stamp duty on their second and any subsequent home purchases.
The majority of people, who already own a home, likewise get no choice at all.
This negates the single biggest economic benefit that would come from abolishing stamp duty in favour of land tax, which is to decrease the costs of transacting property, enabling it to be put to its most efficient use.
The Henry Tax Review concluded that stamp duty doubled the cost of moving house in Sydney, Melbourne and Canberra. Put another way, it was an effective 100 per cent tax rate on relocating, with substantial imposts across the rest of the nation.
As property values have soared, it is likely the effective tax rate of stamp duty on moving has risen further still.
The real-world effects of this are manifold.
It’s another reason for older Australians not to downsize once their children have left home, locking up larger family-friendly housing stock for longer.
On the flip side, it provides incentives for those with growing families to add extensions to their homes rather than move to a more suitable existing property.
Sydneysiders would be looking at a minimum of $50,000 and, in many cases, more than $100,000 in stamp duty to move to a bigger family home — that goes quite a long way towards paying for an extension, especially when that also increases the capital value of your house.
So, gradually over time, we end up with a preponderance of large, over-capitalised houses and less diversity in the housing stock.
Stamp duty means people are more likely to stay in their current homes, even if their working location has changed, resulting in longer commutes.
It may even cause some people to turn down job opportunities that are too far afield, reducing the optimal allocation of skills across the economy.
It also probably results in more homes being rented out rather than sold when people do decide to move to a different town, city or state for work.
Why pay tens of thousands in stamp duty when you can rent out your existing home, potentially negatively gear to reduce your income tax bill, and just rent in your new location? Especially true if you’re unsure how long you will stay.
Economist Cameron Murray disputes these conclusions, pointing out that investors are far more likely to transact in any given year than owner-occupiers.
“While stamp duties are often claimed to be economically costly because they deter households relocating, their main effect is actually reducing investor churn, which is a good thing for property market stability,” he argues.
Another way to look at it, though, is that every time an investor sells it’s a potential opportunity for an owner-occupier to buy that home.
Discouraging investors from selling thus may keep more rental houses in the market, but also keep more tenants locked into renting, particularly when the taxpayer continues to subsidise rental losses through negative gearing.
The weight of expert opinion is firmly in favour of switching from stamp duty to land tax.
“It’s just a bad tax … Best just to get on and do it,” former treasury secretary Ken Henry said in more recent years, a sentiment backed by his successor Martin Parkinson.
Very few economists disagree with them.
The NSW government has argued the initial revenue losses associated with a broader move away from land tax — which are estimated as $11 billion over the first four years before gradually shrinking over time — mean federal government funding is needed to support a complete transition.
Yet the ACT has found a path to phase out stamp duty for land tax without outside support, albeit a long and winding route that will take two decades.
The NSW government’s policy isn’t even a baby step down that road and state Labor’s blanket opposition to any land tax is a U-turn down an economic cul-de-sac.
Stamp duty is stopping older homeowners from downsizing and locking millions of bedrooms out of the housing market as Britain’s population ages.
Telegraph Money this week told how at least a million bedrooms have been locked out of the housing market in the last five years as Britain’s older homeowners stay in family homes long after their children have flown the nest.
The problem will only escalate fast as the number of people aged over 65 swells from 11 million to 13 million in the next decade.
Yet experts and older homeowners have warned that the Government’s excessive stamp duty policy is stopping retirees from downsizing.
Jonathan Stinton, of the Coventry Building Society, a lender, said: “There is no tax incentive to downsize. There should be an urgency about it. People who need family homes will be locked out as more and more homes are under occupied.”
Rozi Allen, 59, lives in London with her husband. “We have a 3,500 sq ft house which we needed when we had four children at home. Now, two of them have jobs and two are at university. We have a couple of Ukrainians staying with us but they will leave. We don’t really need the space – we’re cold and we would love to move.”
But they are staying put for now, because of stamp duty.
Ideally, the couple would have liked to make an interim move to a terraced house in London at around £1.4m, before they made a final move to the countrywide. This would come with a tax bill of £81,250. If they later moved to a cottage outside London at around £1.2m, they would then pay a further £61,250 in stamp duty – a total bill of £142,500.
“I am happy to pay one more chunk of stamp duty, but we will only make one move, not two, because of the tax. That means this family home will be released five years later than it could have been,” Mrs Allen said.
“Even with today’s energy costs, the stamp duty on the interim house would exceed the costs of running the larger house for those five years,” Mrs Allen said.
The Government should let anyone over the age of 55 offset the stamp duty from a downsizing move against the stamp duty bill of a future move, Mrs Allen said. “That would get people to move out of the family houses sooner.”
It would also increase the Treasury’s tax take. If Mrs Allen paid stamp duty on the first move and was able to offset this against the second move, the Treasury would receive £81,250 in tax overall. Without this incentive, Mrs Allen and her husband will only make the move to the cottage, meaning the Treasury take will be only £61,250 – 33pc less.
People now stay living in a property far longer than they used to. Back in 1988, a typical homeowner moved house every nine years, according to property website Zoopla. In the first six months of 2022, the gap was 21 years.
Monthly price growth was 0.3% between September and October 2022, putting the average value of a UK property at £296,422.
Lawrence Bowles, director of research at Savills, said the data “bears the scars of last year’s Stamp Duty holiday deadline” when prices fell by 2.1% between September and October in 2021 as buyer demand eased.
He added: “Higher mortgage rates mean price growth and activity are likely to slow in the coming months when mortgage rates peak.
“But, on the assumption that interest rates gradually ease back from the middle of 2024, Savills is forecasting that values will begin to recover and that the average UK house price will rise by a net figure of 6% in nominal terms over the next five years.
“Further Stamp Duty cuts announced in this September’s ‘mini-Budget’ are also likely to have a distortive effect on the market – but to a much lesser extent. This time, the savings are less generous and the deadline to complete further into the future, so there is less pressure to transact now rather than later.”
Overall, he said, Savills is predicting fewer mortgaged transactions for the rest of this year and in 2023 given these higher interest rates.
He highlighted that inflation data yesterday showed the cost of living measure eased from 11.1% to 10.1%, adding: “That should give the Bank of England the freedom to slow and eventually reverse its trajectory of interest rate rises, which will ease pressure on mortgage affordability and allow transaction activity to return to more normal levels in 2024 and beyond.”
Karen Noye mortgage expert at Quilter, added: “House price growth is starting to slow down, with new buyer enquiries declining for the sixth consecutive month.
“Additionally, mortgage approvals for house purchases have decreased, indicating that prospective homebuyers may be becoming more cautious.
“Just a few days ago, we saw the Bank of England warn that mortgages are going to get considerably more expensive next year for millions. This will take some of the froth out the market as many people will choose to batten down the hatches and others will be forced into putting their homes on the market in a bid to downsize, unlock cash and achieve lower monthly bills.
“The housing market in the short to medium term is likely to suffer somewhat however with so little stock around it won’t take long for prices to start to rise again after a projected dip in the new year.”
Simon Gerrard, managing director of Martyn Gerrard estate agents and past-president of NAEA Propertymark, said the market is pretty flat as it continues to adjust to repeated interest rate hikes and choppy economic waters.
He added: “There’s a more important issue at play, namely that across the country we have a chronic undersupply of housing.
“Successive governments have failed to build enough houses to keep pace with population growth, and the latest proposals in the Levelling Up Bill to allow neighbours to prevent planning applications will only make matters much worse. I won’t be alone in wondering ‘where will our children live?’
“Questionable data aside, anyone in the sector will tell you we lack enough homes. The Prime Minister needs to grasp the nettle and enact genuine planning reform, even if this provokes his backbench. Next month marks the start of a new year, so let’s hope it marks the start of a new approach to planning, too.”
The Northern Ireland Executive should seek devolved powers over Stamp Duty, Propertymark claims.
The agency trade body has urged the Executive to prioritise the implementation of fiscal measures for Stamp Duty, claiming it has the largest impact on property agents out of all the proposed devolved taxes.
It comes as Northern Ireland’s Department of Finance published a consultation seeking views on the introduction of greater fiscal powers available to the Assembly.
Propertymark held a focus group of property agents from Northern Ireland which helped to provide greater insight into the impact of Stamp Duty on the housing industry.
When the body asked its members about the prospect of changes to Stamp Duty, only 12% stated that it should remain at current levels.
This includes Propertymark members who do not believe fiscal policy should currently be devolved.
More than half of Propertymark members surveyed stated that the amount of Stamp Duty paid should be decreased or the threshold should be set in a way that encourages first time buyers to enter the market and others to downsize.
A further 35% stated that property taxes should be aligned at a local level rather than as a reflection of UK house prices.
Propertymark suggested that by decreasing the amount of Stamp Duty being paid and also removing the current additional supplement of 3%, more people will be inclined to invest in rental properties, reducing the impact of landlords leaving the sector.
The industry body has said that greater control over Stamp Duty rates and thresholds will enable the Executive to ensure taxation reflects house prices in Northern Ireland and respond more effectively to price changes.
Timothy Douglas, head of policy and campaigns at Propertymark, said: “Devolution unlocks opportunities for the Northern Ireland Executive to introduce measures that help boost demand in the housing sector. Given the difference in house prices between Northern Ireland and England, it is important that Stamp Duty reflects house prices and supports the local economy, which devolution can provide.
“Reducing Stamp Duty has also led to a significant increase in market activity, as we have seen during the temporary freeze during the pandemic.
“That being said, it is hard to ignore the concerns of our members and the potential for disruption for new policies to be enacted. We hope that the Northern Ireland Assembly returns to full operation to provide reassurances that devolved powers can be administered effectively.”
He said: “The Office for Budget Responsibility has said it expects housing activity to slow over the next two years, and the Chancellor announced in his Autumn Statement that the Stamp Duty cuts introduced by his predecessor are going to be abolished by the end of March 2025.
“Whilst disappointing, crucially it does mean that this support for the housing market will continue for another 28 months – at precisely the time when it needs it most.”
Prior predicted that the trajectory of the market will in part be down to managing the expectations of sellers.
He said: “Vendor expectations on the value of their properties need to be realistic. They should be guided by the prices suggested by our team of knowledgeable experts based in over 40 regional offices around the UK, all of whom have their finger on the current pulse of local market conditions.
“However, the beauty of auctions, of course, means that the market will find its own level. Sellers will always set a reserve price – a safety threshold below which they are not prepared to drop. Then they can sit back and let the competitive environment of the auction room, driven by our talented and experienced auctioneers, work its magic.”
He said high interest rates can be something of a double-edged sword, adding: “At times like this, buy-to-let investors may be reassured by the fact that some of the increased fees can often be partly offset by higher rents, rising because demand is outstripping supply.
“Whatever the circumstances, the key thing to understand is that we are a solutions-based business. If current market conditions mean that you need to sell quickly, whether that’s tenanted stock, a commercial or residential property, auctions can often provide what the rest of the property sector can’t – namely speed and security.”
Meanwhile, online auctioneer My Auction, is set for its busiest month in December after reporting a 77% increase in lot numbers compared with just two months ago.
It said the number of lots per auction has steadily increased throughout the second half of 2022.
Auction values have also subsequently increased in line with rising lot numbers with My Auction’s December lots combined worth around £3m.
This is the highest seen this year, followed closely by May’s auction which listed at more than £2m.
Stuart Collar-Brown, co-founder of My Auction, said: “Given such political turmoil, it’s natural that the interest in property auctions is growing. We saw this back in the crash of the 1990s and then again in 2008 when the last financial crisis happened. In such uncertain economic climates, auctions offer a very viable way to buy and sell property quickly and efficiently with far less stress than buying through traditional private treaty sales.
“For the buyer its appeal is speed of sale, and the transparency and certainty of knowing that you can be in the property within 28 days. For the seller, it’s a quick and efficient way to unload property that could fall in value if a sale isn’t secured quickly.
“Property auctions provide a useful barometer of the property market, often offering an early steer of the direction the overall market is heading in. With base rates increasing, mortgage rates rising, not to mention the looming recession and cost of living crisis, it’s no surprise that traditional residential property sales are taking a hit. During a market downturn, property auctions offer everyone a sensible route to market and we expect interest to continue rising as we head into 2023.”
Back in September, then-Chancellor Mr Kwarteng raised the nil-rate stamp duty band from £125,000 to £250,000, and raised the tax-free first-time buyer threshold from £300,000 to £425,000. This brought the thresholds largely in line with house price growth since they were last adjusted – which for the main nil-rate band was in 2006.
If the higher nil-rate band is reversed, a person buying an average home in England (assuming its value has dropped 9pc to £285,750) will pay £4,287 in stamp duty. This will be a £2,500 jump compared to at today’s rates – or a 140pc increase.
Nick Leeming, chairman of Jackson-Stops estate agents said that the reversal at the end of 2025 will create another rush to transact before the deadline.
He said: “The decision to put a time limit on the tax break is likely to create a bottleneck of transactions in the first quarter of 2025 as buyers rush to lock in the more favourable stamp duty rate.”
But for now, the big problems for the housing market are mortgage rates and the recession.
Just as homeowners are shouldering the burden of higher interest payments, they face a greater risk of losing their jobs. The OBR has forecast that unemployment will jump from 3.6pc today to 4.9pc by autumn 2024.
Property buyers aiming to reduce their Stamp Duty bill with “mixed-use” purchases are being warned that HMRC is sniffing out those exploiting the rules.
It comes as Gü puddings founder James Averdieck was hit with a £120,000 Stamp Duty bill after falling foul of a misguided mix-use claim on his family’s £3m country home.
The Averdiecks engaged a company to reclaim its perceived overpaid Stamp Duty on the basis that a public pathway on their land should be classed as non-residential, arguing that the pathway is used by a farmer which impacts their use and enjoyment of their entire land.
This would have lowered the tax owed but a recent Upper Tier Tax Tribunal case confirmed that any element of perceived non-residential land or building must be commercially exploited to qualify.
The Averdiecks footpath was found not to be commercially exploited as it was used by the farmer to access his farm rather than using the pathway for farming purposes.
Natasha Heron, a tax manager and Stamp Duty specialist at accountants Hillier Hopkins said: “Mixed-use purchases are those which contain residential and non-residential elements.
“The term ‘non-residential’ is not defined in Stamp Duty legislation as it is deemed to be a catch-all category. If an item does not fall within the boundaries of residential, it is automatically classed as non-residential.
“This poses an interesting question for large country estates and homes with paddocks, outbuildings or farmland which may not squarely fit within the conventional residential classification.
“For example, how should you categorise land which is grazed by a local farmer, large areas of woodland, public pathways or large stables which could be used for livery. Some of the larger country estates were historically farms that have been adapted over the years so how should these be classified.
“Unhelpfully, there is little guidance from HMRC and this question has only recently been tested in the courts. We now have a greater understanding of how the non-residential classification is likely to be applied.”
She added that the Averdiecks ruling is a word of warning to treat with caution the aggressive claims by some tax refund agents.
Heron said: “HMRC is taking a much keener interest in SDLT claims and Tax Tribunal decisions adds further clarity. Independent advice from a specialist tax accountant is always advisable.”
Estate agents are charging movers fees of 1.4% on average to sell their homes, new research claims.
An article by consumer watchdog Which? has cited exclusive data from conveyancing comparison platform Reallymoving that suggests the total cost of selling a property and buying a new home has hit £14,207.
It uses estate agency fees of 1.4% as a benchmark, although the guide suggests lower rates are available and advises vendors to haggle for better deals.
Which? said: “There’s not a great deal you can do about your Stamp Duty bill, but there are ways you can cut the other costs of moving home.
“Estate agent fees will be your biggest outlay. Reallymoving uses an average of 1.42% of the sale price – but it’s possible to get a cheaper rate.”
“Get quotes from several agents, and don’t be afraid to haggle over the fee or overall deal. You can also use our partner comparison site GetAgent to compare estate agents’ performance and fees in your area.”
Based on an average property price of around £292,000, the report claims that those selling their own home and buying a new one are paying £6,500 in Stamp Duty, £4,544 in estateagent fees, £2,004 for conveyancing, £456 for a survey, £649 for removals and £55 for an Energy Performance Certificate.
The costings don’t reflect the new Stamp Duty thresholds.
First-time buyers are paying less, due to Stamp Duty reliefs and not having to sell a property but their costs have still increased by 6% to £2,198.
Other reports tend to put average estate agency fees at between 0.75% to 3% plus VAT depending on the area and the agent.
Britain’s banks had pulled a record 1,000 home loans from the market on Tuesday, more than double the 462 products removed during the pandemic in April 2020, according to Moneyfacts. By Thursday, 1,621 deals had disappeared from the market in the days since the mini-Budget.
Virgin Money pulled its entire product range on Monday and came back into the market on Thursday with rates of between 5.24pc and 5.5pc. Many other lenders have adjusted their prices without removing products.
Capital Economics now expects mortgage rates to average 6pc by January next year, up from around 3.6pc in August.
If mortgage rates go up by that amount, the average household refinancing a two-year deal would see monthly repayments jump over 70pc from £863 to £1,490.
These new rates will all affect the borrowers on the 600,000 fixed-rate deals due to expire in the second half of this year, and 1.8 million deals ending next year.
Ray Boulger of mortgage brokers John Charcol says: “When we saw gilt yields go up by 50 basis points on Friday it was clear we were going to see lenders push rates up.
“I was actually surprised that most of them didn’t make that announcement until Monday or Tuesday. The writing was clearly on the wall on Friday, and there was another similar move on Monday that just made things look even worse.”
Borrowers coming off fixed rate deals rushed to remortgage before a rapid upswing in prices. The banks were overwhelmed with phone calls as borrowers sat on hold to secure a new deal. Disgruntled policyholders took to social media to vent their frustrations over call wait times, which in some cases appear to have stretched for between 2-3 hours. Some people have spent several days trying to get through to a mortgage advisor.
Barclays reached its daily booking limit by 10am on Wednesday and Santander was forced to draft in new customer service personnel to deal with the deluge in inquiries. The Spanish bank started redeploying colleagues from other parts of the bank to handle the surge in calls and its operators have been calling back customers in the evening to get through the backlog of queries.
Helen McIntyre, a marketing manager from Daventry, Northamptonshire, spent 3 hours and 15 minutes on Wednesday in a queue to speak with Santander. She has been on a variable rate mortgage since 2009, but now wants to switch to a five-year fixed rate product.
McIntyre says: “It’s not something we’ve had to think about for 13 years. But in the last week it’s massively accelerated from something that was practically running on autopilot, to something that’s consuming all our attention.”
When she finally got through to a mortgage advisor, McIntyre was told she could stay on her 20-year lifetime tracker mortgage or move to a fixed-term mortgage.
She says: “The best fixed rate they could offer for 4.14pc over five years, and there was a £999 fee to arrange it.
“At the moment, we’re paying 2.75pc, and before that it was 0.75pc. So it’s already gone up by 2pc from earlier this year. For us, it’s trying to weigh up whether switching to a fixed-rate mortgage is worth it — particularly if interest rates do eventually go up to 6pc.”
The danger of staying on her current mortgage is that her family may end up feeling the brunt of higher interest rates, when they could have locked in a lower rate earlier.
Pryor says it is reasonable for buyers to look for a discount given the current conditions.
He says: “I don’t begrudge them for a moment, it’s a nervous time, particularly if you are taking that first step onto the property ladder. You want to feel confident that you are doing the right thing.”
Pryor’s five property chain deal that faced uncertainty last week ultimately went through, as all the participants in the chain were able to spread the cost of the price cut. But there is no guarantee that other transactions will enjoy the same fate.
“We are all acutely aware that these are uncertain times and we are all wondering where the market will be in six months,” he says.
“It’s not an easy thing to predict and if I knew the answer to that I probably wouldn’t be here speaking to you. I’d be on a yacht in the Mediterranean laughing into a Martini.”
ouse price growth stalled month-on-month in September, but property values were still 9.5 per cent higher than a year earlier, according to an index.
Estate agents said that there could be some re-negotiations amid a backdrop of rising interest rates – and if this turns into a trend it could soften house prices.
Across the UK, the average house price in September was £272,259, Nationwide Building Society said.
Property values recorded 0.0 per cent growth month-on-month, following a 0.7 per cent monthly increase in August.
Annual house price growth slowed to single digits for the first time since October last year
The annual price increase of 9.5 per cent was slightly more modest than a 10 per cent annual increase recorded in August.
Robert Gardner, Nationwide’s chief economist, said: “In September, annual house price growth slowed to single digits for the first time since October last year, although, at 9.5 per cent, the pace of increase remained robust.
“Prices were unchanged over the month from August, after taking account of seasonal effects. This is the first month not to record a sequential rise since July 2021.
“There have been further signs of a slowdown in the market over the past month, with the number of mortgages approved for house purchase remaining below pre-pandemic levels and surveyors reporting a decline in new buyer inquiries.
“Nevertheless, the slowdown to date has been modest and, combined with a shortage of stock on the market, this has meant that price growth has remained firm.”
Stamp duty cuts were made in last week’s mini-budget.
However, many mortgage products have been pulled in recent days amid economic uncertainties and lenders have been pricing their mortgages upwards, spelling higher costs for borrowers.
Mr Gardner said: “By lowering transaction costs, the reduction in stamp duty may provide some support to activity and prices, as will the strength of the labour market, assuming it persists, with the unemployment rate at its lowest level since the early 1970s.
“However, headwinds are growing stronger suggesting the market will slow further in the months ahead. High inflation is exerting significant pressure on household budgets with consumer confidence declining to all-time lows.
“Housing affordability is becoming more stretched. Deposit requirements remain a major barrier, with a 10 per cent deposit on a typical first-time buyer property equivalent to almost 60 per cent of annual gross earnings – an all-time high.
“Moreover, the significant increase in prices in recent years, together with the significant increase in mortgage rates since the start of the year, have pushed the typical mortgage payment as a share of take-home pay well above the long-run average.”
Nationwide also released quarterly house price figures showing movements across the UK.
Mr Gardner said the South West of England remains the strongest-performing region “even though it saw a slowing in annual house price growth to 12.5 per cent, from 14.7 per cent in (quarter two).”
He added: “Wales saw annual price growth slow to 12.1 per cent but remained the top-performing nation.
“Price growth in Northern Ireland softened to 10.1 per cent. Meanwhile, Scotland saw a further slowdown in annual growth to 7.8 per cent, compared with 9.5 per cent last quarter.”
With interest rate rises, we could start to see some re-negotiations if mortgage offers expire during the conveyancing process, which is currently taking over 17 weeks on average
Nathan Emerson, chief executive of estate and letting agents’ body Propertymark, said: “Our own data from our estate agent members across the UK shows the number of new homes and buyers coming to the market is up year-on-year, which will underpin stability.
“With interest rate rises, we could start to see some re-negotiations if mortgage offers expire during the conveyancing process, which is currently taking over 17 weeks on average.
“A trend of re-negotiation would start to soften house prices as those final sale prices are used by agents to create comparable evidence for the valuing of new properties entering the market.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “So much has changed even since the beginning of September.
“Lenders have been pulling fixed-rate mortgages left, right and centre as swap rate volatility makes them extremely difficult to price.
“Many of the smaller lenders in particular are waiting to see what the market does before relaunching.”
He added: “Borrowers concerned about their mortgage should seek advice from a broker as to the options available and plan ahead as much as possible.”
Lenders have been pulling fixed-rate mortgages left, right and centre as swap rate volatility makes them extremely difficult to price
Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: “The latest data from Nationwide suggest the staggering jump in mortgage rates finally is starting to weigh on buyer demand.
“The increase in the stamp duty land tax threshold to £250,000, from £125,000, will do little to offset affordability issues caused by the upcoming surge in mortgage rates.”
Tomer Aboody, director of property lender MT Finance, said: “We will see a shift in sentiment and the move to a buyers’ market, rather than sellers calling the shots.
“Prime properties, especially within the London area, should sustain values, as foreign buyers look to take advantage of the weaker pound.”
Andrew Montlake, managing director of mortgage broker Coreco, said: “The days of double-digit growth may not return for a long time.
“The level of uncertainty in markets, and being felt by consumers, is off the charts. The brief surge in sentiment caused by the stamp duty announcement on Friday has been wiped out by the tsunami of market volatility since.
“There’s no doubt now that a lot of prospective buyers will either have to look at smaller homes due to the sharply increased mortgage rates they are now looking at, or will shelve their plans altogether and wait until there is more clarity and things have calmed down.
“Prices will without doubt come under real pressure now, but the sizeable drops some have predicted are unrealistic given the lack of supply. Prices are far more likely to flatline than go through the floor.”
Ross Boyd, founder of mortgage comparison platform Dashly.com, said: “After the chaos of the past week, the level of uncertainty in the property market is off the scale.”
Here are average house prices in the third quarter of this year, followed by the annual increase, according to Nationwide:
– South West, £321,725, 12.5%
– East Midlands, £241,699, 12.3%
– Wales, £213,684, 12.1%
– West Midlands, £247,120, 12.0%
– North West, £212,998, 11.3%
– East Anglia, £289,266, 11.2%
– Yorkshire and the Humber, £209,261, 11.0%
– Outer South East (includes Ashford, Basingstoke and Deane, Bedford, Braintree, Brighton and Hove, Canterbury, Colchester, Dover, Hastings, Lewes, Fareham, Isle of Wight, Maldon, Milton Keynes, New Forest, Oxford, Portsmouth, Southampton, Swale, Tendring, Thanet, Uttlesford, Winchester, Worthing), £353,276, 10.4%
– Northern Ireland, £183,960, 10.1%
– Outer Metropolitan (includes St Albans, Stevenage, Watford, Luton, Maidstone, Reading, Rochford, Rushmoor, Sevenoaks, Slough, Southend-on-Sea, Elmbridge, Epsom and Ewell, Guildford, Mole Valley, Reigate & Banstead, Runnymede, Spelthorne, Waverley, Woking, Tunbridge Wells, Windsor and Maidenhead, Wokingham), £435,709, 8.3%
– North East, £159,309, 8.1%
– Scotland, £184,496, 7.8%
– London, £534,545, 6.7%
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