Stamp Duty Holiday has finished, so why are house prices still climbing?
According to recent figures by HMRC, there was a 25% increase in Stamp Duty receipts in the six months from April - October 2021, compared to the same period in 2019. While the flurry of activity in the market boosted the average house price in the UK, many were surprised that once the Stamp Duty holiday came to an end, prices didn't come down with it - but why?
The Stamp Duty Land Tax (SDLT) holiday was introduced during the Covid-19 pandemic to help stimulate demand in the property market. The holiday meant all residential purchases were free from SDLT up to the first £500,000 until the end of June 2021, when it lowered to £250,000 until the end of September. A surge took place overnight as purchasers moved fast to benefit from thousands of pounds worth of savings.
We wrote at the time how the pandemic had impacted the property market - and how many in the property sector, us included, were rushed off our feet to keep up with the demand.
Now that the Stamp Duty Holiday has come to an end, the demand for property is still high, but this time the race is on to ensure the property transaction runs as smoothly as possible, reducing the risk of gazumping as sellers might be tempted to give in to the highest bidder.
And, that risk of gazumping is as high as ever, thanks to a surge in demand and low supply. According to latest reports by Savills housing delivery isn’t expected to fully recover to pre-pandemic trends until 2025-26. Areas particularly hardest hit are in the south and east of the UK, where these forecasts are even higher.
It’s that scarcity of new properties coming to market that is driving prices up - and keeping them there, even though the stamp duty holiday has ended.
Recently released figures from the Office for National Statistics (ONS) showed average house prices hit a record £270,000 after a £28,000 increase over the past year. Across the UK, prices rose 11.8% over the year to September, an increase on the 10.2% annual growth in August. This week Savills suggested that average house prices across Britain could exceed £370,000 in the next five years.
If you are considering investing in property, now is the time to do it - especially if you've been biding your time in the hope that prices may falter. It looks as though the opposite may be the case - and if you're in the market for property in London, you'd better get your skates on as international travel opens up more and more, the City will be open for business once again and those properties will be in high demand.
If you are considering a property purchase, either as an investment, residential or commercial, contact the property team at Downs Solicitors to see how we can help.