First-time house buyers in the U.K. came out of the woodwork in February, as the government's stamp duty relief started to have an impact on the region’s real estate market.
Property sales to first-time buyers rose to 29% of total transactions in February, up from 27% in January, according to a report Monday by National Association of Estate Agents.
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This compares to 22% in February last year and 24% at the same time in 2016. Year-on-year, sales to first-time buyer are at their highest since February 2015, the report said. The report did not separate luxury sales.
The recent Stamp Duty Land Tax relief, enacted in November by British Chancellor Philip Hammond, allows first-time buyers to make a tax-free property purchase up to the value of £300,000 (US$426,972). From purchases between £300,001 (US$426,973) and £500,000 (US$711,620), first-time buyers would pay 5% tax and if the property exceeds £500,000, standard rates apply (with a cap at 12.5%).
"Since the chancellor cut stamp duty for first-time buyers, there have been a good level of sales to the group, but they haven’t rocketed," said Mark Hayward, chief executive of the National Association of Estate Agents, in the report.
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"Our members have noticed first-time buyers holding off on making purchases since the rule was introduced—typically outside of London—opting instead to save for longer to maximize the full stamp duty relief. This may be one reason why sales are up but not as high as we might expect," Mr. Hayward said. The other reason is that the cost of buying is still very high, he said, and first-time buyers are still finding it difficult to save for their deposit
The report also shows that in February, 22% of properties sold at asking price, the highest level since June 2016, when 26% of properties sold for the price they were listed for, according to the report.
Also last month, 74% of properties sold for less than the original asking price, with only 4% selling for more.