Proportion of first-time buyers purchasing homes over £300,000 rises

The proportion of first-time buyers purchasing homes priced over £300,000 has increased, according to Barclays (BARC.L), suggesting that the housing market has adjusted to stamp duty changes.

The bank said that its latest mortgage data showed that the proportion of first-time buyers choosing properties priced under £300,000 fell to 64.3% in September, falling from 72% in May following changes to stamp duty thresholds.

The adjustment to stamp duty bands in April saw the exemption threshold on this tax for first-time buyers drop from £425,000 to £300,000. Buyers rushed to lock in tax savings ahead of the threshold changes taking effect, with separate Barclays data showing a 50% increase in mortgage completions in March.

Barclays said that there was then a shift in demand following the changes, as buyers reduced their budgets to compensate for the increase in tax incurred. The bank found that in April 60.6% of first-time buyer completions were for homes valued under £300,000, before a peak in May.

Read more: December interest rate cut eyed by traders as inflation holds

Over the following months, Barclays said that this proportion gradually settled, indicating that the market had adapted to updated tax thresholds.

The bank's research found that just 8% of prospective first-time buyers cited stamp duty as major barrier to homeownership, down from 11% who said so in April.

The cost of a deposit was the top concern as a barrier to ownership for 41% of prospective first-time buyers, overtaking property prices (39%).The proportion of first-time buyers purchasing homes priced over £300,000 has increased, according to Barclays.·Karl Hendon via Getty Images

At the same time, Barclays found that 27% of renters now believed homeownership is achievable in the next five years, up from 22% in August. And the number of renters actively saving for a deposit to buy a home increased by six percentage points month-on-month to 30%.

The findings are based on data sourced from Barclays mortgage book, as well as on consumer research carried out by Opinium Research in early October.

Across the property market more broadly, the bank said that the composition of property choices shifted across all buyers in the aftermath of the stamp duty threshold changes.

Read more: London house prices decline as broader UK market rises 3%

Before the changes, non-first-time buyers would not pay any stamp duty on homes worth less than £250,000, but this then fell back to £125,000 when the new threshold took effect on 1 April. Barclays said that the share of completions for homes priced between £300,000 and £500,000 dipped from 33.1% in April to 29.2% in May, but has since recovered to 33.6% in September.

Story continues

As for speculation around reform to property tax in upcoming autumn budget, Barclays said that homeowners are holding off on altering their plans, with just 4% saying they are trying to push through a sale in case of tax changes.

Jatin Patel, head of mortgages, savings and insurance at Barclays, said: "Our latest data shows that policy shifts like stamp duty adjustments can create short-term volatility, but buyers adapt to market circumstances.

"As the autumn budget approaches, keeping a long-term view is key, considering the broader outlook for the housing market instead of responding only to the immediate aftermath of any policy changes."

Read more:

Barclays increases car finance provision but announces £500m share buyback Best credit card deals of the week UK government borrowing soars to highest in 5 years for September

Download the Yahoo Finance app, available for Apple andAndroid.

View comments