Stamp duty holiday downsides – Average mortgage deposit up £11k in parts of the property market

The stamp duty holiday may have worked wonders in reviving homebuyer demand but research from national estate agent, Keller Williams UK, has highlighted the downside to buoyant market conditions, as the cost of the average mortgage deposit has climbed by £11,000 in some areas of the UK market.

Keller Williams UK looked at the cost of buying a home based on the average mortgage deposit at 15% of property value and what this looks like in the current market when compared to June of last year when the stamp duty holiday first launched.

At £234,474, the current UK average house price requires homebuyers to stump up £38,461 for a 15% mortgage deposit. This is £3,249 more than the average 15% deposit of £25,212 prior to the launch of the stamp duty holiday – a 9% jump.

Largest increases (£)

The South West is the region to have seen the largest monetary jump in the average cost of a deposit, up £4,196 since the start of the stamp duty holiday. The South East has also seen an increase of more than £4,000, closely followed by the East of England (£3,498) and London (£3,180).

At local authority level, Hammersmith and Fulham has seen the largest jump with the average 15% deposit climbing by £11,458 when compared to June of last year. The initial cot of buying in Elmbridge (£11,223) and Haringey (£10,052) has also climbed by more than £10,000 as a result of the stamp duty holiday, with homebuyers in Rutland (£9,641) and Stratford-on-Avon (£9,236) also facing a considerably tougher task.

Largest Increases (%)

Of course, property affordability isn’t just related to the monetary jump in the cost of a mortgage deposit and while some areas of the UK market have seen a smaller increase in the actual sum, they rank with the largest jumps in terms of the percentage increase in the cost required.

In this respect, the North East has seen the biggest increase in the cost of a mortgage, climbing 13% as a result of the stamp duty holiday. Yorkshire and the Humber has seen a 12% jump, while the North West, South West and Wales have seen an 11% increase. Both regions of the Midlands have also seen a double-digit increase in the cost of a 15% mortgage deposit (10%).

Again, this increase is greater at local authority level, with Carmarthenshire seeing a 25% increase in the cost of a mortgage deposit. Manchester, Oadby and Wigston, East Renfrewshire and Rutland have also seen some of the largest increases at 22%.

CEO of Keller Williams UK, Ben Taylor, commented:

“The stamp duty holiday is now effectively over for all but those in the final stages of a transaction due to the long market delays that have accumulated at the back end of the process.

Much like a night out when you have work the next day, it certainly seemed like a good idea at the time, but current homebuyers will be wondering if it was really worth it given that they now face a considerably larger financial hurdle to homeownership.

This reduction in affordability has been felt right across the UK with southern regions seeing the largest monetary jump, while those in the north are facing the highest increase versus what they were paying previously.

While the end of the stamp duty holiday will no doubt bring a natural correction to an otherwise overheating market, it’s unlikely to cause prices to crash and so the cost of buying looks set to remain a tough ask for those yet to climb the ladder.”