Property Prices Expected to Fall After Stamp Duty Deadline
16th June 2021
16th June 2021
Over the last 12 months, UK house prices have risen by 10.9% (May 2020 – May 2021). This has been the highest level in 7 years, according to Nationwide. Not only have the price in homes increased, but there has been an increase in the number of buyers looking to purchase a residential property. In May, the demand to purchase a new home had increased which was noted by 32% of respondents in researched conducted by RICS.
In relation to the increase of the cost of properties, it appears that the average house price has risen to £242,832, which is an increase of £23,930 over the past twelve months.
Nationwide claimed that buyers are in a “race for space”. This is because buyers have found that they are needing more space during the pandemic. In a study, conducted by Zoopla, having no office space was an issue for 23% of respondents. This is a result of COVID-19 because more people are beginning to work from home. Homeowners are looking to upsize their gardens too.
As well as upsizing from their current residence, homeowners are trying to beat the stamp duty land tax deadline. Buyers, along with sellers have been in a rush to complete deals before the end of the Stamp Duty extension, which has seen properties priced up to £500,000 not being paid with Stamp Duty Land Tax on top.
Despite the residential market booming, it is expected that it will slow down as the Stamp Duty Holiday ends.
In May, it was noted by RICS that the supply of houses cannot keep up to the demand. A net balance of -21% of respondents reported another fall in the number of new listings being brought to the market.
This gap in the supply and demand of properties is at its widest since November 2013. On the other hand, the RICS data suggests that property sales instructions could improve over the next few months, as the survey participants are reporting that the number of market appraisals has increased.
He stated “With the sustained increase in average house prices and sales, enthusiastic prospective buyers continue to be a key market driver.
“While we don’t know how long this frenzy will last, changes to the stamp duty holiday from June 30th may contribute to the market slow down and see buyers change tact.”
Nigel Purves, CEO of Wayhome, said: “With the stamp duty holiday finally coming to an end, we may start to see these levels of activity ease off, but aspiring homeowners will be left wondering what impact this will have on their ability to own a home of their own.”