Chancellor of the Exchequer Philip Hammond announced in his Autumn Budget in November that first-time buyers across the UK will now benefit from the removal of stamp duty for all home purchases up to the value of £300,000.
Many saw this as a positive step towards the government better supporting home buyers in what can be a challenging market at present, with high house prices in many parts of the country meaning affordability really is an issue for thousands of people.
Now, new figures published by online estate agent Rightmove have demonstrated the far-reaching benefits that this decision could have for home buyers in Greater Manchester.
Stamp duty exemption a boost a for buyers
According to Land Registry data, the average cost of a home in the UK now stands at £226,367. However, in Manchester, this figure is lower at just £158,800. This means there is a more than £67,000 reduction in the average price for Manchester home buyers, and ensures the cost to first-time buyers in the area is far lower than the government’s new £300,000 limit on stamp duty.
Overall, Rightmove’s analysis shows the chancellor’s announcement will now unlock a further 10,833 stamp duty-exempt properties for first-time buyers in the area. This could prove crucial in accelerating the uptake of more homes across the city and help to bring many more new buyers into the market.
Investors in the Manchester market will therefore likely benefit from a sharp upturn in demand for properties in the coming years, with more new entrants to the market seeking to carry out purchases due to the lower cash requirements that come with the elimination of stamp duty for this group.
In total, the current average deposit for home buyers in the north-west of England stands at £35,075, with the removal of stamp duty meaning first-time buyers will need to save potentially thousands of pounds less in order to secure their first home.
Indeed, responding to the figures, Ann Irwin, residential property partner at Manchester law firm Slater Heelis, stated: “This is a change, not a stamp duty holiday, so there is no time limit and it can be used on secondhand properties, not just new-build homes, which will have a bigger effect right across the market.
“It can also be used in conjunction with other incentives like Help To Buy ISAs and Help To Buy on new-build homes.”
Increasing demand for homes across the city
Overall, demand for homes in the Greater Manchester area is already high and therefore this latest move towards rising levels of homeownership will likely prompt further calls for new developments to get underway. Indeed, research published by real estate adviser Savills has shown demand for new residential properties across the city is growing.
The firm’s ‘Spotlight on Manchester: where are the gaps?’ report revealed development pipelines “must diversify” in the coming years if the city hopes to meet its full economic potential.
Planning director at Savills Manchester Rob Haslam stated: “If Manchester wants to meet its growth aspirations, it needs a broader range of developments to appeal to its varied demographic.
“There are 7,000 new homes in the pipeline for Manchester over the next two years, but Greater Manchester’s housing need is 11,254 per year – with a little over a quarter of that concentrated in the city centre.”
The report stated that changes to planning constraints could help to unlock more new purpose-built student developments in the coming years – a factor that reflects the city’s strong graduate retention rate of 51 per cent. This is the highest figure seen across all regional cities in the UK and is a significant attractor for Manchester’s employers.
Meanwhile, there is an increasing trend for older property seekers to relocate from suburban to city centre dwellings, in order to be closer to amenities. Indeed, Savills predicts the city’s over-65 demographic will rise at twice the overall rate of population growth during the coming ten years, which in turn could free up many suburban properties in the wider Greater Manchester market. A focus on city centre development will therefore be imperative.
Adam Mirley, development director at Savills Manchester, added: “Housing delivery has grown in the city recently but it’s still not enough, with a shortfall of more than 1,000 homes in 2016-17. Much of the residential pipeline comprises city centre flats, but future supply needs to be more varied in line with the city’s wide ranging population.
“This, coupled with a growing economy means that Manchester needs to continue to accelerate development to help support its fiscal evolution.”
Investors in new developments will therefore benefit from this continued push for more new homes across the city, which has today become one of the UK’s major hot spots for housing need. With a rise in new buyers coming to market and a shifting demographic of those seeking purchases, now could be an excellent time for investors to enter the Manchester market.