The coronavirus pandemic led to a booming housing market; many homeowners fled cities to seek homes with more green space. This month the stamp duty holiday has been scaled back, how will this affect the market?
In May 2021, data from the Office for National Statistics put the average price of a property at £254,624, a 10% rise on the previous year. This rise was fuelled by the desire for a home with more space and the stamp duty holiday, which came into place in June 2020.
Despite the stamp duty holiday ending 30 June 2021, Nationwide’s latest housing market report suggested that prices continued to rise in June 2021, at their fastest rate in almost 17 years. With the average property standing 13.4% more expensive than the previous year.
From 1 July 2021, stamp duty kicked in for properties above £2650,000 at the following rates:
- £0-£250,000 – 0 percent
- £250,001-£925,000 – five percent
- £925,001-£1,500,000 – 10 percent
- £1,500,000 and above – 12 percent.
From 1 October 2021, rates will return to normal which equates to the following:
- £0-£125,000 – 0 percent
- £125,001-£250,000 – two percent
- £250,001-£925,000 – five percent
- £925,000-£1,500,000 – 10 percent
- £1,500,000 and above – 12 percent.
Jamie Durham, an economist at PwC, says stamp duty was not the only factor driving house prices up, and he expects a growth of 5-7% across the year.
“The market continues to be supported by a shift in preferences towards more spacious properties,” he said. “It has also been supported by household savings during the pandemic, estimated to be about £7,800 per adult, and continued low-interest rates. We expect that these forces will support price growth over the coming months, though at a lower rate than we have seen in the first half of 2021.”
Data from OnTheMarket found that 75.5% of active UK buyers were confident that they would purchase a property within the next three months, and 84% of active UK sellers were confident that they would sell their property within the next three months.
According to Halifax, the average price of a property is now £260,358. Russell Galley, managing director of Halifax, said: “The power of home movers to drive the market won’t fade entirely as the economy recovers.”
The demand for more space is still high as many seek larger family homes, detached property is leading in the property climb during the past 12 months.
Detached homes are now £200,000 more expensive than the typical semi-detached house, reaching values of over half a million pounds.
With demand remaining high and supply increasing, the housing market and prices are expected remain very strong, however not quite at the frantic level we’ve seen in the past year.