Industry views: Will the housing market thrive without stamp duty extension?

Residential property prices slowed last month as purchasers anticipate the end of the government’s stamp duty holiday at the end of March, the latest data from Nationwide shows.

On an annual basis, property price growth slowed modestly to 6.4% in January, from 7.3% in December.

On a monthly basis, prices dropped by 0.3% – the first monthly decline since June. The average price in January stood at £229,748, down from £230,920 a month earlier.

Robert Gardner, Nationwide’s chief economist, commented: “To a large extent, the slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.

“While the stamp duty holiday is not due to expire until the end of March, activity would be expected to weaken well before that, given that the purchase process typically takes several months.”

The slight fall in property prices last month is best seen “as a dab on the brakes rather than a post-party hangover”, according to Jonathan Hopper, CEO of Garrington Property Finders.

He believes that the previous pace of rapid price growth seen in the latter half of 2020 was simply “unsustainable”, and that market activity has generally slowed due to the current lockdown restrictions.

“The surge in buyer demand will continue to be a decisive factor, stamp duty holiday or not,” he said.

Looking ahead, the market will need a few months to rebalance, according to Hopper.

He added: “The supply of homes coming onto the market has been interrupted by the lockdown, and this should support prices in the short-term, while in the longer-term price growth should ease as the supply pipeline improves.”

Lucy Pendleton, of James Pendleton estate agents, commented: “Forget the mild monthly price decline, this [latest property price data] is hardly the performance of a market in peril.

“The fact that most buyers agreeing purchases now will almost certainly miss out on stamp duty relief has barely moved the needle so there are wider factors at work here and chances are they’ve been cooking up a storm all along.”

While most estate agents would like to see the current stamp duty holiday deadline extended to enable buyers to benefit from the relief, this would potentially create the same issues further down the line, according to John Phillips, national operations director, Just Mortgages and Spicerhaart.

He said: “There has been talk of a cliff edge as we near 31st March, however while the stamp duty holiday has undoubtably spurred some people into action, the market has not been driven by it. People will still want to move homes.”

Phillips added: “While we understand the calls to extend the deadline, we expect the market to continue to thrive regardless of whether the holiday is extended.”

David Westgate, group chief executive at Andrews Property Group, concurred: “The slight drop-off in prices during January is wholly understandable rather than a cause for serious concern.

“The end of the Stamp Duty holiday and the threat of rising unemployment will of course put some downward pressure on prices, but we do not expect activity levels to drop off sharply.

“There are many positives that could support values during 2021.

“As more and more people are vaccinated against Covid-19, they will want to get on with their lives, and buying and selling property will play a key role in that.”

However, the director of Benham and Reeves, Marc von Grundherr, predicts that a period of heightened instability is on the cards as the end of the stamp duty holiday causes a spike in sales falling through.

He commented: “The party is nearly over where a stamp duty reprieve is concerned, but will homebuyers still be dancing when the music stops? While many have benefitted from the saving, many more are still waiting to complete and missing the deadline could cause a different sort of market chaos to that seen in recent months.”

He added: “This market wobble could result in a far more notable decline in house prices as the deck is reshuffled. However, the market is extremely resilient and so any correction is likely to be short lived before it finds its feet, once again.”

The group CEO of Enness Global Mortgages, Islay Robinson, points out that a notable tightening of the belt across the lending space has made it much harder for the average homebuyer to secure a mortgage, despite interest rates remaining extremely low.

Robinson said: “Without the additional motivation of a stamp duty holiday to drive them to transact, it’s very likely that this dwindling mortgage availability will cause transactional volume to decline during the second and third quarters of this year; cooling the rate of house price growth further in the process.

“Despite this, the market remains extremely attractive for those with stronger financial foundations beneath them and we expect to see a robust level of activity at the top end keep the overall market moving forward.”

In summary January was still an impressive month for UK house prices, especially when you compare the 6.4% annual growth to the 1.9% reported this time last year.

Sam Mitchell, CEO of online estate agent Strike, said: “Understandably many will be questioning how long the demand can last, particularly in the context of the wider economic changes on the horizon, from rising unemployment levels to the impact of Brexit and uncertainty around stamp duty. However, ongoing low interest rates and higher loan to value lending, coupled with vaccination confidence and people continuing to reassess what they need in a home, will definitely continue to help demand remain strong for a long time to come.

“In the absence of a glass ball no one can be certain about what lies ahead, but we can confidently say that the market has been faced by challenges like this before – and it always comes out the other side stronger than ever. The government is committed to helping Britons buy homes and move up the property ladder, and will likely do whatever it takes to keep house prices steady despite any economic changes.”

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  1. Essjaydee51

    Wow, stock and positive answers I expected but self kiddology and early delusion hmmmm. if I ran a cake shop I wouldn’t tell you not to buy my cakes because if you wait, tomorrow I’ll have the same ones but cheaper ergo buy today before we sell out is the message we want to convey. In fairness I didn’t think your markets (and businesses) defence was too OTT and I can see some truth and common sense there and of course you have to be positive but the market does need a price correction, there will be a lull in business for many reasons that you know but didn’t mention but I understand that, like said earlier, we don’t have that crystal ball.

  2. Ric

    Feels like the market has already kicked back to the market we had in 2018 / 2019… some activity for sure, but only really the MUST moves seem to be happening.


    I can only speak for myself and perhaps guess at what I see on the tinterweb in my area but my valuations are all (SADLY) death, divorce and debt… not really been to any sell and move up market, and I think they all happened in Q3 & Q4 2020.


    It certainly doesn’t feel like a normal start to a year and perhaps the bad weather, lockdown and the unknown after Furlough has and is causing this in my area.


    Dog fight for stock for the next 3 to 6 months I suspect…

    1. EAMD172

      We have been in lockdown and still are. How anyone can think that valuation numbers over the last 6 weeks are a true reflection of the market is surprising. There are plenty of people waiting to get their children back to school, waiting until they feel out of area buyers can come and view or waiting until Covid is not about to walk through their door, before putting their homes on the market.

      1. Ric

        Replace my word “Valuations” with “Listings” perhaps and add lots of other measures. I agree valuations alone are not a measure, but my point I still stand by.


        Much of 2020 was lockdown (be it lockdown or Tiers), 2021 lockdown is ****** optional! The property market remains open…. and anyone wanting an excuse to carry on as normal are just getting on with it..  the older clients perhaps not… the most vulnerable, but I do not think the Dec/Jan Lockdown has stopped valuations in anyway…it has stopped listings and does anyone have a double digit measure ups booked in and yet to be done, I think there is more to it. (My guess)


        The first lockdown was also harder than this one by a million miles… and that stopped no one. With SDT holiday, January I would have expected those not knowing if hitting it was possible or not to be on the phone asking and trying even… yet only a handful of people have enquired.


        If I count the Desk Top Valuations I am relatively busy BUT the desk tops are the “might move, might extend” and all end up saying, I thought as much on price, thanks for the advice, we are going to extend. (I don’t judge on valuations as much, as last year was my lowest valuation year for years, but actually one of the best listing years! So quality over quantity I expected in January and expect in February)


        I agree as I say, lockdown, weather and other factors could be a reason for a low level of valuations, but I do not think it is unreasonable to think 2021 might be a **** storm of a year for many.


        2020 was busy because we did 12 months work in 9 months and had some 2021 movers come forward. So no way was a normal market.


        Hope we are busy bla bla, but at the moment the feeling is not a market waiting for lockdown to end, it feels like a market which we have had for years before COVID… low instruction levels and my guess is people wondering WTF after Furlough ends and the true picture of business comes out.


        I would feel different if the high streets and roads were empty and the housing market was “closed” but it is open and there are lots of people getting on with life.

        1. smile please

          Ric, this comment shows why you have a successful business. You are able to read the market where sadly many cannot.

  3. EAMD172

    We have had nearly 5 years of unususual market conditions with firstly Brexit, Covid and then Stamp Duty holiday. Therefore, You have to look at what has happened to prices and numbers of transactions in total over that whole period to see what is likely to happen once the Covid situation eases and SDLT holiday finishes. My maths tells me that prices are about where they should be (house price increase versus wage increase) so we will see a steady but small increase from March 21 to March 22. The increases we have seen in the last six months are easily countered by the flatter line during Brexit negotiation years. Pent up demand and supply post-Brexit were speeded up by the SDLT holiday but there are still plenty of people wanting to move. Most important thing that happens is the FTB mortgages need to become easier to get and at higher loan to value. THAT is the fuel of the property market over the next 18 months.

  4. Seeing_the_Positive03

    This market has not had time to breathe for 3+ years thanks to Brexit and COVID which is a major factor but so is unemployment levels.  Certainly those in need, which are likely to be a high number,  will be propping up the market but no doubt its going to be an up and down year.

  5. James White

    Whilst ever the lenders will lend, buyers will buy.

    Sellers might not sell though, which is as big a consideration as anything.

    A lack of stock sadly leads to a greater lack of stock.

  6. smile please

    Short sharp correction coming by way of numbers for sale and sale agreed.


    Lets face it the last 12 months has been an artificial market.


    Another agent near us is opening an additional office, does make me wonder if people can read the market past the next 24 hours.


    Good business is still out there and will continue to be but agents will have to work for it. Does not worry me, i look forward to it.


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