Ending of Stamp Duty Holiday Indicates Return to ‘Normal’ Housing Market Activity

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Halifax have reported that there has been a +0.4% monthly change in house prices along with predicting that buyer activity will decrease in upcoming months.


A recent analysis of the prime central London property market has shown that transaction volumes are falling as the Stamp Duty holiday deadline approaches, and under-offers and new instructions are returning to historic long-run levels.


LonRes, an independent property analyst, have looked at the numbers and as expected, they found that sales which would normally have been going to complete in July, were rushed forward to complete in June.


Marcus Dixon, head of research at LonRes commented:

“A month on from a record-breaking June, the impact of the stamp duty holiday is still with us. It’s been a quiet July for exchanges as sales which under normal conditions would have occurred this month were pushed forward into June.


“Unsurprisingly, the lower end of the market saw the biggest fall in activity between June and July. Only the top end of the market, above £5 million, recorded an annual increase. Buyers here were perhaps less inclined to be part of the conveyancing scrum leading up to 30 June.


“The stamp duty holiday announcement on 8 July 2020 led to a surge in new instructions and under offers over the month. This makes comparing July 2021 with July 2020 somewhat misleading.


“While July this year looked particularly quiet compared to the same time last, the reality is that new instructions and properties going under offer over the course of the month were much more in line with the long-run average. And if confidence were needed, these key metrics suggest the prime London markets are holding up well.”


More specifically, the number of sales recorded in the run-up to the first Stamp Duty deadline (30th June) saw new monthly, and quarterly records for activity across main London.


The idea of saving £15,000 on a property meant that many deals were pulled forward into June. For July this resulted in fewer transactions. The number of properties sold had decreased by 22% in July 2020 when the market had been driven by the pent-up demand built over the first lockdown. There was also a 39% down on the five-year July average (2015-2019).

A higher proportion of more expensive homes sold in July has impacted average prices too. This is in contract to May and June when a higher propertion of lower prices properties sold. As a result, average prices increased by 15.8% annually in July, following a 6.2% year-on-year fall in June. 

Comparing prices achieved over the last three months gives a more balaced picture. Across prime areas of London, prices in the three months to July were down 1% on July 2020.

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