Current levels of house price growth are unsustainable and are stilll skewed by last year’s Stamp Duty rush, Savills has claimed.
The agent predicts house price inflation will be flat this year amid rising inflation and low wage growth, and warns that first-time buyer numbers may actually be inflated as a consequence of the Stamp Duty changes.
Citing Council of Mortgage Lenders data, research by Savills shows home mover numbers fell by 8% compared with the same period in 2015 while first-time buyer numbers increased by 7%.
This means that first-time buyer numbers were equal to home movers in the second half of 2016, for the first time since the mid-1990s.
But Chris Buckle, associate director at Savills research, said that rather than first-time buyer numbers increasing, instead many in that category may actually really be home movers using cash given to them by their parents who can no longer co-purchase the property due to the extra Stamp Duty rules.
He said: “Home mover numbers have clearly been suppressed by increased mortgage regulation, constraining the amount aspiring upsizers can borrow, but we believe these numbers also point to another trend – a change in the behaviour of the bank of mum and dad.
“Parents are now less likely to help their children access the market by co-buying a property, which would incur the 3% additional home Stamp Duty charge, but give a cash injection instead.
“As a result, these purchases are recorded not as home mover activity, but further boost first-time buyer numbers already inflated by government schemes such as Help to Buy.”