The number of homes coming to market has risen by 12% as homeowners prepare to move and react to possible tax changes, a property listing firm said.
In its latest House Price Index, Zoopla suggested the increase in homes listed for sale was due to lower mortgage rates making sellers confident about the housing market.
The firm also said some of these properties came from “investors and second homeowners selling in response to recent and possible tax changes”.
Second homeowners readying for tax changes
It has been speculated that the government will announce an increase in capital gains tax (CGT) at the forthcoming Budget later this month, which could impact people with investment properties and second homes.
Zoopla’s data suggested this, with 32% of the homes up for sale on its site being chain-free. It said the most common chain-free homes were two-bed houses, with 41% currently listed on the site.
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As well as this, previously rented homes now make up 13% of properties for sale on the site.
With some English councils expected to double council tax for second homes next year, Zoopla noted a rise in homes for sale in coastal and rural areas that are typically popular with second homeowners.
Its data showed a 47% increase in homes for sale in Truro, a 44% rise in Torquay, a 41% uplift in Exeter, a 41% increase in Lincoln and a 40% jump in Bournemouth.
However, the data also showed annual house price growth in these areas was still negative and the increase in housing supply was “keeping house prices in check”.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said homeowners were “falling over themselves” to shift holiday homes and buy-to-let (BTL) investment properties.
She added: “They’re panicking that changes that might come through in the Budget could saddle them with a huge tax bill on their gains, making property investments even less attractive from a tax perspective.
“When they come to sell, there’s already capital gains tax to pay on any gains on second properties – at a higher rate than on stocks and shares – but the Budget could make this bite harder. It might raise the rate of tax people pay on property gains, or it could force them to pay capital gains tax on properties they leave after their death.”
Nigel Bishop, founder and managing director of Recoco Property Search, held a similar view, adding: “Second homeowners and buy-to-let investors are facing drastic changes as some local authorities have or are going to start charging double council tax for properties that are left empty for more than a year.
“We are seeing more second homeowners contemplating if maintaining their holiday home remains a sound financial investment. If a substantial number of second homes is being put up for sale, we could see the property market in areas such as Cornwall become increasingly attractive to house hunters who are seeking a permanent residence but are currently priced out of the market.”
He added: “That being said, a lot of properties are being offered at considerably high asking prices and sellers will need to adjust their expectations.”
Slow recovery in house price growth
The firm said although mortgage rates had dropped, affordability was constraining house price growth, especially in the South of England.
Average asking prices had improved modestly, with London recording an annual increase of 0.5% compared to declines of 1.7% last year.
Prices in the South West, South East and Eastern regions of England were also found to be lower than the same period last year.
Across the rest of Great Britain, house price growth was up annually at 2.5%.
Zoopla said although market conditions were improving, it was important to set the right price to attract buyers.
It said this was true for the fifth of homes that had been on the market for more than six months and were still unsold, as well as the 37% of sellers that reduced their asking price by 5% to attract a buyer.
Most of the new listings on Zoopla come from homeowners looking to move into a new home, but the firm noted that a fifth of properties had already been on the market in the last two years.
Zoopla’s data showed that the number of sales agreed was up by 25% on last year, while buyer demand had risen by 26%.
Richard Donnell, executive director at Zoopla, said: “Lower mortgage rates are delivering a much-needed confidence boost to homeowners, many of whom have sat on the sidelines over the last two years. Market activity is up across the board and expectations of lower borrowing costs will continue to bring buyers and sellers into the market.
“Speculation over possible tax changes in the Budget and the impact of previous tax changes are continuing to add to the growth in the number of homes for sale. We remain in a buyers’ market and greater choice of homes for sale will keep house price inflation in check into 2025.”
