Several recent reports have confirmed that house price growth is slowing, but there are reasons to believe that the housing market will be more stable than last year.
According to Knight Frank, the third lockdown and the imminent end of the Stamp Duty holiday have played a major part in delaying a certain amount of activity until the spring, which could result in some short-term downward pressure on prices, as more sellers come to the market at the same time. Over the course of the year, Knight Frank expects prices to remain flat and for there to be steady, seasonal demand after the summer as the vaccination rollout nears completion.
In January’s ‘UK Residential Market Survey’, the Royal Institution of Chartered Surveyors (RICS) expects all UK regions will see prices rise to some degree over the next twelve months, with Northern Ireland, Wales and Scotland expected to see the highest rises.
Nationwide’s Chief Economist Robert Gardner commented on the rate of growth, “The slowdown probably reflects a tapering of demand ahead of the end of the Stamp Duty holiday.”
Nearly 750,000 buyers benefit from Stamp Duty holiday
Almost three-quarters of a million homebuyers are in line to benefit from the Stamp Duty tax break, assuming they beat the 31 March completion deadline. This represents total savings of almost £5bn.
The analysis, from Zoopla, is broken down further; 600,000 buyers will not pay any Stamp Duty, which is an average saving of £4,660 each or £2.8bn in total. A further 140,500 people whose homes cost over £500,000 are set to benefit from a Stamp Duty reduction and will save £15,000 each or £2.1bn collectively. This latter group will still have to pay tax on the portion of the property value above £500,000.
Rightmove have reported rumours that the tax break may be extended in England and Northern Ireland by a further six weeks. If this were to be the case, Rightmove estimate that between 120,000 and 160,000 extra property transactions in England could benefit.
Property Data Expert at Rightmove, Tim Bannister commented “If there was a six week extension it should give the majority of the sales from last year the chance to complete in time.”
Regional variations in values of family homes
After three lockdowns and an increase in those working from home, many people have been reassessing their housing priorities.
Research by Zoopla has looked into which regions have seen the biggest jump in values of three to five-bedroom houses, finding that family homes in the Midlands have seen the biggest jump in value over the last four years. First place goes to East Midlands, with a sq ft price increase of 25.4%, or £43, to stand at £212. West Midlands takes second place, seeing a rise of 24.6% to reach £223.
Wales came third, with an increase of 23.6% per sq ft, followed by East of England (21.4%) and North West (21.3%). London came ninth, with a percentage rise of only 14.6%, but unsurprisingly, also seeing the biggest monetary increase, with a jump of £71per sq ft to stand at an average £558.
According to Zoopla, the home sales pipeline is now 50% bigger than this time last year, with 140,000 more buyers rushing to buy a home before losing out on the Stamp Duty holiday, which is due to end on 31 March 2021.
Elsewhere, Nationwide have reported a total 91,500 mortgages approvals were granted in September, which is well above the August figure of 84,700 approvals and represents the highest level since September 2007.
The stampede to buy homes is being driven by a combination of the government’s Stamp Duty holiday, as well as people reassessing their housing needs following lockdowns. There are concerns that the current high volume of sales going through will create delays in the conveyancing process and this could be exacerbated by lockdowns. Zoopla have estimated that only 54% of sales agreed in January will have completed by the end of March, compared with 92% of those agreed in November.
Tax receipts from Stamp Duty on property sales fell by £1bn over the last tax year, to a total of £11.9bn according to latest figures from HMRC.
However, Capital Gains Tax, which is payable when buy-to-let homes are sold, rose to £9.2bn, up from £7.8bn a year earlier.
The decline in Stamp Duty has been blamed on a decline in buy-to-let purchases and a slowdown in the higher end of the property market, in addition to the majority of first-time buyers having been removed from the tax.
Data from Landbay Rental Index shows the
average rent paid for a property in the UK is now £1,218 per month, up by 0.96%
in the 12 months to April 2019.
Excluding London, the average rent in the rest of the UK was £773 per month, with Scotland recording the highest annual growth at 1.78%; Edinburgh being Scotland’s rental hotspot with an annual increase of 5.44%.
John Goodall, CEO of Landbay said: “Landlords can rest assured that there is decent rental growth to be found across the UK, particularly if they look north of London”.
According to the latest property supply index, there was a surge in owners listing their properties in the days after Brexit was delayed again, with listings up 0.8% in April, month on month.
Analysis by online estate agent, Housesimple, revealed that almost half (49%) of major UK towns and cities saw a rise in new properties coming onto the market in April compared to March.
The overall picture in London showed new listings down by 1.4% in April compared to March, but four in 10 boroughs actually saw supply levels rise, with the biggest rise occurring in Kensington and Chelsea, with listings up by 17.3%.