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Blog
Property news of the week: June 17th 2021
Property news
17 June 2021

Property news of the week: June 17th 2021

Sam Edwards
Writer

Table of contents

  1. 1. Rush to beat stamp duty deadline
  2. 2. Speculation on house prices beyond SDLT holiday

It’s hard to believe that a year has passed since Chancellor, Rishi Sunak, first introduced the holiday on Stamp Duty. Now however, as these tax breaks retreat into their exit phase, there’s a lot more talk about ‘damage done’ rather than ‘money saved’. In the midst of this, are questions regarding the future of the property market.

Rush to beat stamp duty deadline

Ahead of June 30th’s staggered return to normal stamp duty rates, there have been calls for alarm regarding its inflammatory effect on the property market. During a webinar on inequality hosted by the University of Glasgow on Tuesday the 8th, Andy Haldrane, the Bank of England’s chief economist, warned that the housing market was ‘on fire’.

Indeed, while many welcomed the extension of the stamp duty cut deadline, data suggests that, combined with favourable interest rates for low mortgages, the extension has resulted in a struggle to meet demand. Rightmove’s figures alone state that over 704,000 homes are now in the process of being sold across the UK.

These huge numbers are accompanied by an inflation in housing prices. The UK’s largest lenders, Nationwide Building Society and Halifax have both reported large annual price increases of over 10%. In their Housing Market Update, Savills have likewise reported a double digit growth of 10.9%, the highest since August 2014.

Speculation on house prices beyond SDLT holiday

While many experts have predicted the house market’s growth will slow after June 30th, Savills have stated that ‘strong value growth, putting more equity in home-movers pockets’, will be an advantage and may help sustain high activity beyond the SDLT holiday.

Increased savings have also played a big part in the market’s boom. Thanks to the introduction of lockdowns and work at home schemes, richer households have accumulated well over £106 billion in savings since the beginning of the pandemic. According to Zoopla, over a quarter of new movers (from a study of 2400 subjects) claim that it was due to increased income that they were finally able to move homes.

These new savings could help the seller’s market to continue on strong after the SDLT deadline, as rich and competitive buyers are likely to continue bidding to secure their new home. Though the 117,860 transactions in April were 36% lower than the record-breaking 183,170 seen in March, they were still 59% above the 2018-20 average.

However, the rush in March for buyers to meet the initial SDLT deadline demonstrates just how reliant the market’s current boom is on the holiday. After SDLT rates begin to dial back to their original levels, the demand for homes may well decrease. Without the demand of the past year, house prices could be seen to even out.

In the wake of Mr Haldrane’s warnings, however, the Bank of England has sought to ease concerns regarding the market’s future. Deputy Governor, Dave Ramsden, has assured watchers that the central bank was carefully observing the housing market for another jump in consumer price inflation.

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