UK Property Market Outlook: Cities Gain Popularity, House Prices Fall

The UK property market is evolving, with an influx of first-time buyers looking to purchase urban homes, particularly in Dundee. House prices are falling, with a 0.8% drop in June and a 2.1% rise overall in the year. Stamp duty changes and a flooded market with sellers are contributing to these trends.

The UK property market continues to evolve, with an influx of first-time buyers seeking urban homes, particularly in Dundee. House prices in Dundee have seen a notable 0.8% drop in June, with an overall annual rise of 2.1% [1]. This trend is influenced by various factors, including stamp duty changes and a flooded market with sellers.

Dundee ranks second among UK cities with the quickest home sales, boasting a median selling time of just 18 days [1]. This rapid turnover is attributed to the city's ongoing regeneration projects and growing reputation as a cultural and tech hub. The city's property appeal is clearly on the rise, making it an attractive option for buyers. However, the swift sales also indicate a competitive market, which can lead to lower prices.

Stamp duty changes are expected to have a significant impact on the UK property market. The chancellor, Rachel Reeves, has announced an increase to stamp duty rates for second homes and investors, effective from 1 April 2025 [2]. This change will see the surcharge for second properties rise from 3% to 5%. Additionally, the thresholds for paying stamp duty will fall on 1 April 2025, potentially leading to larger tax bills for buyers. For example, purchasing a £600,000 property would result in an extra £2,500 in stamp duty if the transaction is completed after the threshold change [2].

The first-time buyer's relief will also change, with the threshold falling to £300,000 from £625,000 [2]. This means that first-time buyers will pay stamp duty at a rate of 5% on the portion between £300,001 and £500,000, which could make buying a home more expensive for those in this bracket.

The impact of these changes is expected to lead to a jump in property transactions during the first quarter of 2025 as buyers rush to complete their purchases before the thresholds change. However, the effects of the changes are not likely to be as large as previous ones due to high interest rates that are still putting off some buyers [2].

In conclusion, the UK property market is experiencing significant changes, with Dundee emerging as a hotspot for rapid home sales. Stamp duty changes are set to influence the market, potentially leading to increased transactions and a more competitive landscape. Investors and financial professionals should keep these trends in mind when making decisions about the property market.

References:
[1] https://www.scotsman.com/lifestyle/homes-and-gardens/dundee-named-in-top-2-uk-cities-with-the-quickest-home-sales-according-to-new-study-5248318
[2] https://www.jwafinance.co.uk/what-the-2025-stamp-duty-changes-mean-for-the-property-market/