House prices set to fall as stamp duty end date looms

Residential property prices look set to fall over the next few months as the end of the stamp duty holiday nears.

According to the Office for National Statistics (ONS) House Price Index, property prices eased in April, ending 11 consecutive months of increases.

The data shows that the average price of a home increased by 8.9% in the year to April 2021, down from 9.9% in the year to March 2021.

The ONS data found that in the year to April average house prices rose by the greatest margin in Wales, up 15.6% to £185,000.

This was followed by England, up 8.9% to £268,000, Scotland, up 6.3% to £161,000, and Northern Ireland, up 6% to £149,000.

London continued to be the region with the lowest annual growth – 3.3% – for the fifth consecutive month.

Marc von Grundherr

The director of Benham and Reeves, Marc von Grundherr, commented: “London has been slowly simmering in comparison to the rest of the UK market having been hit hardest by pandemic uncertainty and a reduction in foreign homebuyer demand, in particular.

“However the tide is slowly starting to turn and while there’s a very real chance that the wider UK market will come off the boil by the end of the year, London will continue to bubble.”

If there is anything that underlines the changing trend in property buying, it is the eye-watering growth rate recorded in the North East, according to Nicky Stevenson, managing director at Fine & Country

She points out that the North East has eclipsed all regions bar Wales.

“A leap of 16.9% in 12 months is staggering,” said Stevenson. “By next year we’ll be looking back at a figure like this with some awe but the way the market cools from this point doesn’t have to match the rally for excitement.”

Nicky Stevenson

She added: “If the government’s financial support packages have worked, and employment prospects remain strong, then a gentle long tail that avoids outright falls in prices over the medium term is still likely as we head towards the end of the year and into 2022.”

With the influence of the stamp duty cut now subsiding, the pace of price growth is starting to ease off “as buyers become realistic rather than romantic in what they’re willing to pay”, according to Jonathan Hopper, CEO of Garrington Property Finders.

He commented: “The pace of price growth is starting to ease off as buyers become realistic rather than romantic in what they’re willing to pay.

“Coupled with a gentle improvement in supply as more sellers put their home on the market, this reality check has blown some of the froth off the market.

“Given that annual price rises had hit double-figures in the most in-demand coastal and rural locations, this slight cooling in price inflation is welcome.

“There is still huge momentum and optimism in the market and estate agents are digging in for a very busy summer, but the gravity-defying price rises are starting to ease.”

Nigel Purves, chief executive of Wayhome, added: “With the stamp duty holiday coming to an end and other government incentives measures starting to taper off, we’ll soon learn how hard it will be for aspiring homeowners to get onto the ladder in the post-lockdown market.”

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22 Comments

  1. purplepatchy

    Yes and last year we were told that house prices were going to fall between 10-30% by RICS, the Bank of England, Nationwide, Rightmove, zoopla, Kirsty and Phil, that annoying bloke who came up with the dazzling company that was emoov etc etc. Negative headlines in a good market have more of an impact on buyer confidence / house prices than anything mentioned in the article.

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  2. Essjaydee51

    Oh no it won’t.

    Its true, no sdlt discount, no more furlough, redundancies, closures and cutbacks due to above and that says potentially more stock, less buyers and low and behold, a buyers market and price reductions will ensue, not 30% but certainly 10-15% and that is how the housing market goes but mostly, only those that have been an agent for more than 14 years will see that change of flow as has happened 3 times in last 37 years ish

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  3. El Burro

    Rubbish.

    Supply and demand rules apply. If supply is limited and demand is high prices go up.

    10 years ago the Govt said that we needed to be building 232,000 homes a year just to cope with population growth. The last time we built in those numbers was in the late 70’s. The highest we’ve managed since 1989 was 178,000 in 2019 so the shortfall has worsened significantly in the last decade.

    The end of the Stamp Duty holiday won’t change that.

    The volume of properties sold in the remainder of the year may be lower because of the Stamp Duty bubble but anyone working on the front line will tell you that instructions are like hens teeth now and with the demand for more space, especially outdoors, continuing to be a major driver because of C-19, scarcity will still force prices up.

     

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  4. Richard Copus

    Demand and supply rules don’t just apply.  To a larger extent but for similar reasons the market crashed big time in 1989 and did not recover until 1996.  Then it was double mortgage tax relief ended rather than stamp duty holiday and prices had gone up at a similar percentage rate to this last year and the population had already started its dramatic increase.  The only difference was that interest rates were very high then and negative equity was a problem which means that this fall will be smaller.  Houses are not like Mars bars.  The law of supply and demand is much more subtle because most people don’t have to move and there is a major built-in confidence factor.

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  5. smile please

    Only way prices will fall is if supply outstrips demand.

     

    And that’s not happening anytime soon.

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    1. Richard Copus

      Please can I have one of your Mars bars, Smile Please before they run out of stock!

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    2. londoneye

      So if rates rise, unemployment rises, and you really believe that prices are going to rise because demand outstrips supply? My forty years of experience in property tells me you are wrong. There will be a fall of between 5% and 15% in my view. Already here in SW London, over 50% of the communications from Rightmove are price reductions, in some cases over 10% greater than agents advised. Again from experience what happens in London, tends to happen first and this then ripples out into the wider market. I’m delighted that some agents are doing well, I suggest however you make hay while the sun shines, the forecast is looking at more unsettled weather shortly.

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      1. biffabear

        Same in SE London.
        Tons of unsold flats on the market and thats all they build here, high rise flats.

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  6. The Yorkshireman

    What a load of b****cks!

    Huge shortage of housing stock and unprecedented demand, first time buyers on the streets in droves partly due to better mortgage availability…………

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  7. WatchingwithInterest

    Who writes this rubbish!

    The star struck agents that give feedback to these articles must be desperate for PR as you really wouldn’t want to put your name to it.

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  8. Essjaydee51

    Oh dear, some people really haven’t been doing this for long and they don’t properly read comments, they only take what they want to hear which is delusional but par for this industry, anything positive (or BS and kidology) and you grab on and hold for dear life and anything negative (or truthful from experienced agents) and you slate till you actually believe it too.

     

    Londoneye is correct, most of the housing industry starts in London and ripples out to the rest of us and his figures resonate with mine and that’s 40 and 36 years experience respectively but you believe what you like as it makes you happy, some areas do not get affected as badly, some areas worse and some miss until a bit later, we are all on the cycle it just hits places at differing times.

    I’m not saying this to be negative or controversial, I just get fed up of reading bu –s–t kidology that they want you to believe then get you to pour it out to all and sundry like real news thus treating you all as fools and sheep, a lot of you will have different experiences to another agent this month or two then the table turns and they get the positives (or negatives) for a bit, you’ve heard of peaks and troughs or make hay whilst etc well at the moment virtually everybody is making hay, please tell me you don’t expect that to continue in its present vein!

    The government has always said we need to build far more and we never have reached targets so how do you explain the drops in the market using the anology you used, most of your points are misguided and you only go back 10 years, I said 14 years minimum to understand, so you underpin my comment.

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  9. biffabear

    In London prices have been falling for a year. Especially for flats.

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    1. londoneye

      I have just had a Rightmove alert, I think it’s my sixth of the day. In this, the latest, of the eight properties being advertised, five are reductions, – 62.5%! As estate agents, we can all select stories to make a point about how the market is booming. However looking at the larger picture, the market here in SW London is not as strong as some people might wish to believe. I know many other agents who have said the same thing to me. Also, foreign buyers are also in short supply, this has a large knock-on effect in our market. Family houses in good conditions with gardens, on good roads, are in short supply and selling well. Two-bedroom flats with no outside space and needing work are struggling.

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      1. PeeBee

        What exactly is reducing, biffabear and londoneye?
         
        Aspirations… realisations… or both?

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        1. biffabear

          People have fled London. As London Eye says. A nice Victorian house with a garden will sell.

          But flats.   You can’t give them away. I have a 1 bedroom flat for sale for £10,000 less than they bought it off of me for 5 years ago. And there is zero interest in it.

           

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          1. htsnom79

            And there’s the rub, a lot of us, perhaps the significant majority of us, do not have leasehold newbuild or conversions as anything other than a fraction of our stock, in any market whether boom, bust or everything in between.

            Personally I despise this type of market and would far rather have stock coming in more easily even if they’re harder to shift with reduced demand, skills come in to play rather than this bun fight.

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          2. PeeBee

            Thanks for that, biffabear.

            So – the flat market is exactly that.  A combination of causes, I would suspect – including no doubt a strong element of damage that the Leasehold and cladding ‘scandals’ have inflicted upon that sector of the market.

            But if flats aren’t selling, who are buying the houses?  Has a complete tier been cut from the London market?

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            1. londoneye

              The article poses the questions, ‘House price set to fall as stamp duty date looms’.

              This may or may not happen. My crystal ball is being repaired at present!

              I am only reporting what I see in my area.

              To support my views Righmoveplus informs me that 74 properties have been reduced in price since 1st June in Battersea.

              Also, there are 740 properties that have been on the market for more than 12 weeks.

              It’s not all doom and gloom but it’s not all a bed of roses either.

              We have stock, we have buyers, we are doing sales, but pricing is critical. Fees are huge because of the prices which range from £500,000 to +£2m. Every agent wants some of the action, therefore overvaluing is rife and these properties then stick on the market.

              I valued a property over two months ago at £725,000, it came to the market at £850,000 and was reduced a week later to £800,000. Many agents over promise and then under deliver. No valuation tool I know of supports this absurd valuation and the property not surprisingly remains unsold.

              Also given a two-bedroom flat in our area will command a figure of around £725,000, I let you do the maths on the salary you need if you have a 10% deposit.

              Overpriced property + sky-high prices mean buyers will move that little bit further out where they can get more for their money = the result, is a slower moving market.

              This is not a forecast, it’s what is happening now, my experience tells me this is also starting to happen elsewhere.

               

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              1. PeeBee

                londoneye

                The headline wasn’t a question – it was a statement.

                Unlike you, I don’t possess a crystal ball.  I don’t want one.  I’ll take the future as it becomes the present – and then consign it to ‘the past’ straight afterward.

                You can’t learn from the future… you can’t use it to expand your knowledge, or to learn from the mistakes of yourself or of others – as those mistakes haven’t been made yet.

                But it is possible to influence the future – as we have seen time after time.  The housing market and its’ turbulent passage through time is the prime example.  A ‘boom’ market is fuelled by what happened yesterday. A ‘bust’ market is fuelled by fear of what might happen tomorrow… or next week… and so on.  And that fear is fuelled by what people are saying today; what was said yesterday… or last week…

                Self fulfilling prophecies are ‘a thing’. Wish for something enough… tell enough people you’re wishing for it – and often it arrives on your doorstep.  Hardly something that deserves a gasp of “Quelle surprise!” – more of a whispered ‘No 5h!t, Sherlock!’.

                Individuals like paulgbar666 moan about how all flats are unsaleable; wouldn’t buy one if paid to do so (his words not mine – tells you a lot about the bloke, I would suggest)… waiting ” to offload to mug buyers” – then cry onto their soup because no-one will buy something they bought – but no longer want for the aforementioned reasons.

                They will never learn.  But they expect Estate Agents to be there to pick the pieces up, every time.

                Estate Agents who, in the main, never learn.

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  10. Mintimus

    As a mortgage broker working with various estate agents in outer London I think there has been a lot of generalisation about demand and supply without taking into other factors. We have had an artificially inflated market where estate agents so desparate to take on stock have told sellers what they want to hear to get the property on. The good times are over as buyers are holding back unless the property is something they want at whatever price and more pertinently the comparable evidence of price for mortgage valuers just isn’t there. Lenders are still reducing rates which suggests falling mortgage numbers/stalling market and needing a way to achieve targets. In short estate agents are going to have to start talking honestly about the market to vendors current and potential. Whether that will happen is a moot point but when supply does increase post covid there is inevitably going to be a correction and here’s to that  

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  11. Hasu parmar

    The flats are not selling. The price is too high in some areas. I have  noticed that  in some areas the sellers are trying to sell their flats less than what they originally paid. Is it even worth buying a flat if you  are  going to struggle to sell at a later date?

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    1. PeeBee

      “The flats are not selling.”

      That is wholly incorrect. Flats are selling… just not all of them.  In exactly the same way that houses are selling… just not all of them.

      Rightmove figures for UK flats (as at the time of posting):

      Total flats on market – 230614

      Flats Under Offer / SSTC – 113,109 (49.05%)

      Pick any date in the past 12 or so years, and that percentage would be seen as amazing. But because everything is selling… and because houses and bungalows have an even higher rate of ‘success’, it’s somehow deemed a poor show.

      “in some areas the sellers are trying to sell their flats less than what they originally paid”

      Yes – in some areas, some flats are selling for less than they were bought for.  The same can be still said for some houses in some areas.  Here’s a very similar sentence worth considering if you are concerned about reducing values of possessions and assets:

      “In all areas, most sellers are trying to sell their car for less than they paid for it.”

      Yet nobody bats an eyelid at that.

      “Is it even worth buying a flat if you  are  going to struggle to sell at a later date?”

      That depends who is buying it; the reason they are buying it for – and a million other variables.

      Same goes for anything you buy, doesn’t it?

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