The end of the stamp duty holiday has resulted in residential property prices slipping back from a record high, the latest government data released yesterday showed.

The Office for National Statistics reported that the average price of home in Britain dipped to £268,000 in October from £271,000 in September.

In the 12 months to October, property prices increased by 10.2%, or about £23,000. That was below the 12.3% annual growth posted the previous month.

The ONS data is at odds with the recent surveys published by Nationwide and Halifax, which both reported a continued increase in prices since the stamp duty holiday ended.

Property industry reaction:

Lawrence Bowles, director of research at Savills, commented: “Annual house price growth slowed across most UK regions in October, according to the latest data from the ONS this morning. UK average prices rose 10.2% in the year to October 2021, down from 12.3% growth in the year to September.

“London and the East of England bucked the trend, however, with accelerating growth. House prices in London rose 6.2% in the year to October, compared to just 2.8% annual growth the previous month. While values in the East of England crept up to 11.2% from 10.8% the previous month.

“Acceleration of London prices reinforces the narrative that the appeal of city living is strongly linked to the easing of social distancing measures and the relaxation of international travel rules. It also aligns with the latest RICS survey results, in which London showed the greatest increase in new buyer enquiries in November.

“We expect UK house price growth to continue easing through the tail end of the year, as the market slows in the run-up to Christmas. The latest data from TwentyCi shows the number of homes listed for sale in November remained 8% below the 2017-19 average, while the number of sales agreed ran 16% higher than normal. With limited stock available to purchase and little sign of demand easing, we can expect to see a strong start to price growth in 2022.”

Nick Leeming, Chairman at Jackson-Stops said: “Despite a slight fall in the rate of increase in average house prices from September, today’s numbers remain higher than the previous peak seen in June showing that lack of supply has continued to govern the 2021 housing market as we head towards the end of the year.

“In a competitive market, speed is paramount and how quickly a buyer can proceed is often what will clinch a sale with vendors. A large number of people who lost out on buying their countryside home this year due to strong competition in the market are now in rented homes and are perfectly positioned to buy a permanent base in the areas they have tried and tested over the last 12 months. Historically, cash buyers achieve a discount when purchasing properties due to their favourable buying position. Our latest research however shows that cash buyers have been digging deeper this year than prior to the pandemic, spending nearly £32,000 more than in previous years, and in the South West paying 99% of the average house price. We are recommending that those buyers not in a cash position to at least have a mortgage in principle agreed and as much paperwork progressed as possible.

“Buying a home is a long-term commitment, and the desire to own a home is one nested deep in the nation’s psyche. Undoubtedly we’ve seen sellers delay listing their property until they feel confident that they can find their suitable next step. However, we would expect that the traditional new year spike in activity combined with a possible interest rate rise will bring a little more confidence for potential movers. We would anticipate a tempering of what has been a fervent market with new listings coming to the fore as the year progresses.”

Lucy Pendleton, property expert at independent estate agents James Pendleton, commented: “House prices have tripped over the loss of the stamp duty tax break but it was a stumble rather than a fall. That said, change is in the air and house prices fell in October across 70% of UK regions. That was quite a turnaround in a single month.

“Double-digit annual growth going into the Christmas season is still a phenomenal showing given the challenges that have dogged the economy for nearly two years. However, it now looks like the market is pulling away from dizzying annual growth that has characterised the UK’s Covid-era housing market.

“This signals what could become a bit of a changing of the guard as we head into 2022. London has trailed the wider country in terms of house price growth during Covid but is showing signs of a resurgence. This is being helped by the fact that it has become better value in relative terms with every month that has gone by where the rest of the country has eclipsed its gains.

“London was one of only two regions alongside Scotland to see valuations fall in September but this all changed in October, when nine of the UK’s 13 regions sinking while London bucked the trend with a surprisingly robust rise. With the capital’s annual growth rate shifting fast from 2.8% to 6.2% in a single month, change is in the air.”

Nicky Stevenson, Managing Director at national estate agent group Fine & Country, said: “Monthly house price growth in October relaxed slightly following the end of the stamp duty holiday but the outlook remains positive with annual growth still in the double digits.

“Though transaction levels have eased off following the giant spikes witnessed in the summer, new listings have failed to keep up with demand meaning prices remain buoyant.

“The big story here is that London prices have seriously begun to rebound after a quiet period caused in large part by the pandemic.

“We always expected prices in the capital to make a comeback as people returned to work and the months ahead will be crucial as the government seeks to deal with the effects of Omicron.

“A successful roll-out of the booster jab programme could see London experience the same boom as other parts of the country.”

Iain McKenzie, CEO of The Guild of Property Professionals, said: “Although we’re nearing the end of the year, it’s important to remember that this data is from the time when the stamp duty holiday had just ended.

“House prices eased across the UK as the rush to snap up property subsided, although this was only a gentle softening compared to the strong growth we’ve seen over the past year.

“Wales has seen the value of property rocket, with the nation reporting 15.5% growth in house prices, compared to 6.2% in London. The capital has seen inflated prices long before the pandemic though, so it’s worth bearing this in mind.

“With today’s inflation figures higher than expected, we could see interest rates start to rise in the coming months, potentially encouraging buyers to act sooner rather than later.”

The managing director of Barrows and Forrester, James Forrester, commented: “A marginal decline following the final curtain of the stamp duty holiday was always on the cards but a one per cent monthly drop is far from the market collapse that many have been expecting.

“The real proof in the pudding is the annual rate of appreciation and this is the third consecutive month where house prices have climbed by more than ten per cent year on year.

“Based on the market trends seen following the initial stamp duty holiday deadline, we can expect house prices to bounce back on a monthly basis ahead of the Christmas break, as many push to complete before Santa comes to visit.”