Wondering whether the property market will change when the stamp duty holiday comes to an end? While there are no guarantees, many experts think it will remain healthy…

If you’re in the middle of purchasing a property and you’re not a first-time buyer, the forthcoming stamp duty deadline is no doubt playing on your mind as you try to steer your purchase across the finish line before the end of the month.

On the other hand, if you plan to start house hunting later in the year, you may be wondering what will happen to the property market towards the end of 2021 and whether prices will come down.

It’s important to understand that the stamp duty holiday is being phased out gradually. This was a deliberate decision by the government to avoid the property market ‘falling off a cliff edge’. The first phase of the stamp duty holiday comes to an end on 30 June. Currently, buyers who complete on a property before the end of June pay no stamp duty on the first £500,000 of the property, with the potential to save up to £15,000. From 1 July, buyers will pay no stamp duty on the first £250,000 of the property price. From 1 October, they will pay no stamp duty on the first £125,000 of the property’s value.

Property market boost

The stamp duty holiday has boosted the property market, so many prospective buyers are wondering what will happen to house prices when it ends on 1 October.

Let’s just recap on prices this year. So far, it’s been a busy and healthy year for the property market. House prices in the UK rose by 10.9 per cent in the 12 months to May 2021, the highest level seen in seven years according to Nationwide.

Rightmove’s house price index, based on asking prices rather than sold prices, found that average asking prices had risen by 1.8 per cent month on month. Tim Bannister, a property expert at Rightmove, believes that market activity will remain strong for the rest of this year.

Stamp duty holiday

As the stamp duty holiday is being phased out gradually between July and September, many experts also believe house prices will remain stable. Estate agent Savills predicts that prices will rise by four per cent for the remainder of the year. It had previously predicted that prices would remain flat but recently revised its prediction.

Another reason why prices could remain healthy is supply and demand. There are currently more buyers than properties, and according to Propertymark (a body representing estate agents and letting agents), this looks set to remain the case for some time. A spokesman for Propertymark said that there is an ‘imbalance’ of supply and demand, making it a seller’s market. New homes coming onto the market fell by four per cent month on month according to RICS’ (Royal Institute of Chartered Surveyors) April report. Propertymark said that one in three homes in the UK in April sold for more than the original asking price.

Will things slow down? A survey of 1000 homebuyers by Barrows and Forrester estate agents showed that 81 per cent expected to miss the September deadline for the £250,000 threshold.

The reopening of the hospitality and travel sectors might have encouraged more people to focus on holidays and put their moving plans on hold for a while, but the delayed removal of restrictions may reduce the likelihood of this happening.

Summer house price rises

Russell Galley, Managing Director for Halifax, said prices could continue to rise from July, especially as some prospective buyers had accumulated savings during the current restrictions and would therefore be in a stronger position to buy. Halifax said that almost £22,000 had been added to the average house price sale since 2020. 

Let’s not forget that it’s still fairly cheap to borrow. There are some competitive mortgage deals on the market, especially if you have a larger deposit. There are also more options for first-time buyers, with the 95% Mortgage Guarantee Scheme launching in April and the government recently launching its First Homes scheme, offering 30 per cent discounts on homes for first-time buyers. So if you want to move this year, don’t hold back. Start your search and remember, we’re here to help if you need mortgage advice.

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