Wondering what will happen to house prices now the stamp duty holiday is being gradually phased out? We asked some property experts for their views, including one of our own experienced mortgage advisers
The first phase of the stamp duty holiday ended on 30 June. Before the end of June, buyers would pay no stamp duty on the first £500,000 of a property’s value. From the start of July to the end of September, buyers will pay no stamp duty on the first £250,000 and from 1 October, no stamp duty on the first £125,000. In essence, the tax relief is reduced each time. With the stamp duty frequently credited as boosting the property market, we asked some industry experts what they think will happen to house prices and how buoyant the market is likely to remain this year.
A buoyant market so far
‘The market has been so buoyant with so much demand that many estate agents ran out of houses to sell! There is currently still a very good level of demand, but our clients are reporting that there isn’t much housing stock available to view and to buy and that what comes available is still selling remarkably fast. In a perfect world, we’d like to see more properties coming available to increase the supply side of the equation and balance the market, and with the much larger stamp duty incentive now removed, we’ll likely see this happen over the coming months.
I’ve been pleasantly surprised with the number of new enquiries still coming in, despite the chunky part of the stamp duty holiday coming and going, and a good proportion of these are first time buyers. The cladding issue remains a huge problem for some – and I’d like to see the government attempt to get some kind of grip on this – but first-time buyer demand will keep the market for flats steady while houses continue to sell like hot cakes.’
James Watson, Mortgage Adviser, MB Associates
Record low base rate
‘I believe the market will remain buoyant as long as the banks keep lending, and the rates remain low which I suspect will be the case for the foreseeable future.
‘Having worked through the recession of the early 90s where very high interest rates approaching 16 per cent were recorded, I personally witnessed how homeowners had no other choice but to send their keys back to the lenders as they simply couldn’t afford to pay their mortgage. As a result, there was a huge drop in prices, in some cases by as much as 60 per cent.
‘Then in 2008, when banks stopped lending unless you had a “perfect” credit rating and a big deposit – this created a huge drop in prices again, although it came back far quicker than the 90s drop one as soon as banks relaxed the strict lending criteria.
Fast forward to 2021, and we’re now in a situation where we have a record low base rate and lenders that want to lend, which is likely to see the market continue to move, particularly as the public has built up huge savings due to lockdown and many want more space to work from home.’
Martin Gibbon, Group Managing Director, Balgores Property Group
‘Despite an anticipated levelling off, demand is still likely to be at a good level with many buyers having waited for over a year to make a house move. With many people’s priorities changing over the last 15 months, I envisage a good, stable market over the course of the rest of the year. We just won’t see the frenzy to get property sales over the line, there will be time for buyers to look at all properties available and make a timely decision as to which property they want to proceed with.’
Kirsty Burnham, Head of Property, Movewise
Race for space
‘Nationwide and Halifax have listed the overall increases as between nine and 13 per cent which is an unprecedented rise, especially given the pandemic, but I think the majority of these increases are not solely linked to the stamp duty holiday. Other factors will keep the market buoyant. Buying needs have changed due to the pandemic and the “race for space” will not diminish soon.
‘In the long-term, I can see only regional variances. The Northwest (Manchester, Liverpool, Blackpool) I think will see six per cent growth in addition to the pandemic gains and Yorkshire/Humber will follow. Property has always been behind the national curve but that’s going to change, especially in Leeds and its surrounding areas; strong commercial sector activity always plays its positive part in regeneration and price increases.
‘The Midlands will produce slightly less price growth due to being the engine house of UK manufacturing and many eyes will be focused on the end of the furlough scheme and how the landscape looks when all the pandemic support has gone.
Which of course leaves London and The South. London will remain stable, and the “staycation” landlords have been very busy in the South with new purchases.’
Lynne Lister, Financial & Sales Director, X-Press Legal Services
Please get in touch with us if you need advice on getting a mortgage.