Pent-up demand in the property market and buyers rushing to beat the stamp duty holiday deadline have combined to fuel significant growth in house prices in recent months.
Residential property prices rose by 7.6% over the year to November 2020, up from 5.9% in October, to stand at a record high of £250,000, according to the latest data from the Office for National Statistics.
Property price growth was strongest in Yorkshire and The Humber and London where prices increased by 9.7% year-on-year.
Jeremy Leaf, estate agent and a former RICS residential chairman, said: “This most comprehensive, though rather historic, of all the various housing surveys still shows buying and selling activity racing ahead.”
But while thousands of buyers rush to beat the stamp duty holiday cut-off date, many agreed property sales are stuck in the processing logjam and awaiting completion.
Leaf continued: “The reality on the ground now is that although many are rushing to meet the deadline, prospective home movers remain in limbo.
“They are sitting on their hands, partly because of lockdown restrictions but hoping for a stamp duty holiday extension as they know the present backlog would make it increasingly difficult to take advantage.”
Looking forward, Leaf expects to see a much more balanced housing market.
He added: “Many of those who have agreed transactions will not make it in time but show little sign now of withdrawing or attempting to renegotiate especially while the shortage of stock continues to underpin prices.”
There is growing demand for an extension to the stamp duty holiday from many of those who have started the buying process but have yet to complete.
Iain McKenzie, CEO of the Guild of Property Professionals, commented: “The record high in average UK house prices in November underlines the astonishing level of demand triggered by the stamp duty holiday.
“The lure of significant tax savings took a market that was already full steam ahead due to pent-up demand and sent prices even higher.
“Our members all reported unprecedented levels of activity during the closing stages of 2020. The usual seasonal slowdown simply did not materialise.”
Demand has so far remained strong and there appears to be no immediate sign of a property slow down. But that could soon change.
“It would be wise to exercise some caution as we near the end of the furlough scheme, the stamp duty holiday, and the impact of a third national lockdown unravels,” said Miles Robinson, head of mortgages at Trussle.
TV property personality Phil Spencer fears that the housing market faces “bedlam” if the stamp duty deadline is not extended beyond 31 March.
Speaking on The Graham Norton Radio Show on Virgin Radio last week, the presenter of Channel 4’s Location, Location, Location said: “I think chaos would ensue if the stamp duty holiday did end on a specific date, because everybody would be working towards that day.
“It’s great to keep people motivated towards that day but actually, if they haven’t completed their deals on that date, the chances are that deals will be collapsing left right and centre, it will just be bedlam.”
For now, “judgement day” for the housing market will be 31 March once the stamp duty holiday comes to an end, according to Rich Horner, head of individual Protection at MetLife.
“After this [date] we will have a greater understanding of what the next 12 months look like for the wider market,” he said.
If people keep talking about chaos then chaos will reign
For some who are maxed out on their affordability, the stamp duty saving could mean move or not. But I bet they are in the minority and I would suggest that many who are lined up to make a saving on stamp duty who miss the deadline, could still “afford” to move, but are wrought with the greed of a missed opportunity.
The industry needs to get a hold of these people and make them examine the “real” reasons they are trying to move and get them moved away from “money only”
As an industry, we should not be sitting on our thumbs “waiting for the inevitable” We have massive influence to exercise to change the minds of thousands who otherwise might withdraw because they miss the saving.
So get to it folks
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register