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February sees residential transaction number move upwards

Residential property transactions grew by 15.3% on a monthly basis in February 2022, official government figures show.

In total, on a provisional and non-seasonally adjusted basis, there were 96,250 transactions of this type, which is 20.6% lower than recorded in February 2021.

However, as Dashly founder Ross Boyd puts is: “Comparisons between February this year and last are like comparing apples with pears given the impact the stamp duty holiday had on transaction levels.”

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The figures also show that on a non-adjusted estimate, there were 9,860 non-residential transactions in February, which was 17.4% more than in January and 10.2% higher on the year.

Seasonally-adjusted, the report counts 112,260 residential transactions – a 4.4% improvement on January and 20.8% lower than seen in February 2021, and 11,020 non-residential transactions – 9.5% up on a monthly basis and 8% up on a yearly basis.

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Mark Harris comments: “Some heat has come out of the purchase market compared with last year but the remortgaging market is picking up as borrowers attempt to lock into low mortgage rates before they disappear.

“Increasing living costs, rising mortgage rates and higher taxes make for an unwelcome triple whammy which may put the brakes on the housing market unless the chancellor comes up with a strategy to soften the blow in his spring statement.’

By Gary Adams

Source: Mortgage Finance Gazette

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Property transactions down 12% as market ‘normalises’

Residential property transactions were down 12 per cent between October and December, but experts say the dip was simply a sign of the housing market returning to normal.

HM Revenue & Customs data published last week (February 4) also showed property transactions incurring stamp duty land tax – those worth £125,000 or more – were 10 per cent lower than in the previous quarter.

Both dips were preceded by four quarters of growth following the stamp duty holiday which began in July 2020. October marked the first month back to normal stamp duty land tax brackets, having been adjusted during the pandemic to prop up the housing market.

Home buyers had been able to avoid the tax on properties priced at up £500,000 until June, before the price brand for tax exemption returned to £125,000 in October.

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Conor Murphy, chief executive of Smartr365, said the decrease in transactions was “certainly no cause for concern”.

He continued: “The market is fundamentally in a sound place – underpinned by low mortgage rates and high mortgage availability – demand remains overwhelmingly positive.

“While there have been a couple of artificial spikes over the past two years influenced by external stimuli, which we expect to pass, the gradual readjustment to ‘normal’ activity should not be seen as a sign of an unhealthy market, but rather a natural process.”

Murphy said advisers’ focus this year should be on helping clients navigate the headwinds of rising living costs and inflation, suggesting many clients will need more guidance than usual to help them through the house buying process.

Despite property transaction volumes dipping, the government still made more money off stamp duty land tax than the previous quarter, due to the fact far more properties were paying the tax again.

Receipts increased 19 per cent from October to December compared to the previous quarter, finishing on £2.95mn.

Back in April, the government also introduced a 2 per cent surcharge on the purchase of residential properties by non-residents. Up to the end of Q4 2021, HMRC said this had resulted in 8,500 transactions paying £86mn in tax.

“With many central London properties laying empty as a result of overseas buyers purchasing prime real estate as an investment, the tax was introduced to try and make it a fairer market for Londoners often priced out,” Karen Noye, a mortgage expert, explained.

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Research published yesterday (January 7) by Butterfield’s mortgage operations in the UK found 70 per cent of 1,100 homebuyers it surveyed wanted to see overseas buyers pay an even higher stamp duty land tax rate than the current 2 per cent.

This was as another majority of those surveyed, 58 per cent, said stamp duty is an “outdated tax” in need of a reform.

“Clearly in its first full year in force there remains interest in property from overseas buyers even despite the global pandemic and the restrictions on travel,” said Noye.

“With the UK being one of the first countries to emerge from the pandemic London property may soon become attractive again if overseas buyers can stomach the additional tax. However, with house prices remaining very high it may be one step too far for this type of investor for the time being.”

Noye agreed with Murphy that the dips in stamp duty and residential transactions painted a picture of a housing market that is “slowly getting back to some sort of normality”.

She added: “With interest rates on the rise and a cost of living crisis looming it’s likely that some of the wind is coming out of the housing market’s sails and prices may start to deflate after intense double-digit growth.”

Last week (February 3), the Bank of England raised the UK’s base interest rate to 0.5 per cent, the second increase since September.

By Ruby Hinchliffe

Source: FT Adviser

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BoE: Net mortgage borrowing rises to £3.6bn

Net borrowing of mortgage debt by individuals amounted to £3.6bn in December, according to the Bank of England’s latest Money and Credit update.

The report also showed mortgage approvals for house purchase rose to 71,000 in December, above the 12-month average to February 2020 (66,700).

Consumers borrowed an additional £0.8bn in consumer credit, on net. The effective rate on new personal loans fell by 16 basis points to 6.27% in December.

Sterling money was unchanged in December, down from a £14.1bn increase in November.

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Households’ holdings of money weakened, with net flows of £2.7bn compared with £5.1bn in November.

The effective interest rate paid on individuals’ new time deposits with banks and building societies fell to 0.36%.

Large businesses borrowing from banks fell to £0.3bn in December, whilst small and medium sized businesses repaid £0.6bn.

Private non-financial companies (PNFCs) redeemed £3.2bn in net finance from capital markets.

Dave Harris, chief executive of more2life, said: “Today’s figures suggest that December provided a quieter end to what had been a busy and turbulent year for the residential property market.

“Fuelled by the stamp duty holiday, we saw house prices climb as demand outstripped supply – especially for first or second time buyer properties.

“With gifting high on the agenda for over-55s, we also saw the later life lending market grow with the Equity Release Council highlighting that £4.8m had been released by new and returning customers in full year 2021.

“And the market’s growth wasn’t just limited to the amount of equity released – average loan sizes and the number of products in the sector both grew noticeably in 2021.

“As we look ahead to 2022, the industry needs to focus on continuing to build this momentum by creating greater awareness and education around such products, among both advisers and borrowers.”

Paul Heywood, chief data and analytics officer at Equifax UK, added: “Consumers were dealt a triple blow to their finances in December, as inflation, the festive period and a widely debated base rate rise exhausted purse strings.

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“Any consumer confidence that grew in November was quickly diminished, as demand for credit dropped and net borrowing of mortgage debt fell in line with November figures.

“We already knew that 1.7 million households defaulted on or missed at least one rent, loan, mortgage, bill, or credit card payment in December 2021, so it comes as no surprise that households were unable to inject more money into their deposit accounts.

“Lenders must be mindful of these difficult circumstances and consider using Open Banking to spot the signs of financial difficulty in advance.

“Doing so will strengthen protection against over indebtedness and help consumers to make the most informed decisions when it comes to their spending.”

Lisa Martin, development director of TMA Club, said: “Today’s figures show that 2021 ended on a quieter note when compared to the unprecedented levels of activity seen throughout the year.

“The low levels of mortgage lending since October were not altogether unexpected, especially since the market saw near record levels of activity in the lead up to the stamp duty holiday.

“The ongoing threat of interest rate rises, coupled by the increased cost of living, will lead to an increase in remortgage activity levels throughout the coming months.

“However, there is still demand among homebuyers, and brokers will need to help their customers lock into appropriate, affordable products while they can.”

By Jake Carter

Source: Mortgage Introducer

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Buyer demand up 12% from October

The average number of house hunters registered per estate agent branch stood at 571 in November, an increase of 12% from October’s figure of 511, according to NAEA Propertymark.

The number of properties available per member branch stood at 20 in November, a continued decline from 21 in October, and the lowest figure Propertymark has ever recorded.

This means there was an average of 29 buyers for every available property on the market in November, a 21% increase in competition from October.

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The average number of sales agreed per estate agent branch fell slightly to seven in November, from October’s figure of eight.

Year-on-year, this figure is almost half of the sales agreed last year which stood at 13 for November 2020.

However, looking back over the past five years, seven was the average number of sales agreed for the month of November.

In November, 38% of properties sold for more than the original asking price, an increase from 21% in October.

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This was also almost four times higher than last year’s figure when 10% of properties sold for over the asking price.

The number of sales made to first-time buyers rose to 29% in November from October’s figure of 25%.

Nathan Emerson, chief executive of Propertymark, said: “The pressure on the housing market and consequently house prices, is continuing at an unrelenting rate.

“However, heading into December, the market should start to slow.

“Those with a property to sell would be wise to act sooner rather than later as the level of demand is expected to continue into the first quarter of next year but cannot last forever.”

By Jake Carter

Source: Mortgage Introducer

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November property transactions up 24% from October: HMRC

UK residential property transactions increased by 24.3% in November compared to the previous month, the latest statistics from HMRC show.

However, the 96,290 residential transactions last month was 16.4% lower than November 2020 on a seasonally adjusted basis.

Non-residential transactions last month were 10,840, 15.9% higher than November 2020 and 9% higher than October 2021.

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The provisional non-seasonally adjusted estimate of UK residential property transactions in November 2021 is 104,980, 13.4% lower than November 2020 and 22.7% higher than October 2021.

The provisional non-seasonally adjusted estimate of UK non-residential transactions in November 2021 is 11,340, 21.3% higher than November 2020 and 10.9% higher than October 2021.

Karen Noye says: “The increase in sales may well be halted in the coming months now that the Bank of England has increased interest rates as mortgage rates will subsequently rise. While the BoE had not yet made its decision to increase rates when this data was collected, lenders had already started to raise their mortgage rates as a result of wide speculation of a hike.

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“Now the Bank has raised rates to 0.25%, prospective buyers may well be put off. Highly inflated house prices coupled with higher mortgage rates as a result of the hike will make buying a home all the more unaffordable.

“First time buyers, who are already often dealt the highest mortgage rates due to high loan-to-value ratios, will see the property ladder pushed one step further away.

“While it may make buying a home more difficult in the short term, the interest rate rise could well serve to knock back the massively inflated housing market. As less people are keen to move and demand decreases, house prices may well fall – albeit probably at a slower pace than some may hope.

By Bek Commane

Source: Mortgage Finance Gazette

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House prices could grow by 35% between 2020 and 2025

Residential property prices look set to increase in 2022 and beyond, according to the latest forecast.

Strutt & Parker has predicted that house prices will rise by 7% next year in a ‘best case’ scenario, though it also made a ‘downside’ prediction of 2% growth.

These new figures indicate the pace of growth will slow as market activity settles following a buoyant market motivated by the stamp duty holiday.

By comparison, UK-wide house price growth reached 10.3% in the year to Q3 2021, the highest year-on-year growth seen since Q3 2014, with housing transactions over the same period reaching 442,930, the highest recorded since Q3 2007.

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Its predictions for Prime Central London (PCL) are however more positive and stand at 10% and 5% respectively. This follows the £5m-plus market increasing in Q3 2021, due to international high-net-worth buyers re-entering the market.

Guy Robinson, head of residential at Strutt & Parker, said: “The residential market has made a significant recovery in the last 12-months. This has been fuelled by high levels of demand across the market and attractive mortgage rates, while a rebound in the economy gave buyers and sellers confidence to trade up or down the housing ladder.

“Following significant house price growth year to date, rising at a rate that had not been seen for seven years, the outlook remains positive for 2022 and beyond. Buyer demand continues to be robust and applicant numbers are still significantly higher per property than any time since 2006.

“We are still seeing exceptional demand for family housing in the country with access to facilities and connectivity especially along the coast. That said, it is still unclear the extent to which the shifts in behaviour and lifestyles witnessed will materialise into permanent shifts in market demand. More time will be needed to adjust to these factors and there could be further corrections in the early part of 2022.”

Strutt & Parker’s PCL sales index data showed house prices rose by 0.7% from Q2 to Q3, up from 0.1% on the previous quarter. Year-on-year growth to Q3 2021 stands at 1.2% – the first time annual growth has surpassed 1% since Q3 2014 – however, PCL prices remain 20% down from their 2014 peak.

Louis Harding, head of London at Strutt & Parker, commented: “The first half of the year in PCL saw a record-level of transactions, supporting positive year-on-year growth. However, Q3 was unable to sustain or build on this momentum. As a result, prices have steadied in recent months and have yet to see the same rebound in growth as the mainstream regional market. However, we expect this to come through in the following 12-months as international travel resumes and pent up demand is released in to the market.

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“The market continues to be driven by transactions on properties over £3m, and in particular the house market, with prime locations, such as Kensington, Chelsea and Notting Hill, outperforming the wider PCL market, and these trends are likely to continue in 2022.”

Across the UK’s regions (excluding Greater London), between Q1 and Q3 2021 sales transactions were up 37.5% by comparison to the same period in 2020. Strutt & Parker’s analysis of housing transaction volumes reveal Scotland, the South West and East of England recorded the biggest jump in transaction volumes.

Kate Eales, head of regional agency at Strutt & Parker, commented: “Beyond London, we have seen every part of the UK outperform in terms of transactions in 2021, with coastal villages and the Cotswolds emerging as popular hotspots. The £500k- £700k price range continues to move fast and properties in this bracket are the most coveted. We expect this will continue and anticipate properties in attractive country villages with good connections and amenities to show the strongest growth in 2022.

“Going in to next year, less-traditional locations in the likes of Norfolk and Herefordshire could be the biggest winners as buyers become more confident being further from London, though we are yet to fully understand the impact of lifestyle changes for those moving out of the capital. One trend however that appears here to stay is more and more sellers are entering the regional markets, but supply remains constrained.”

Area2021 2022 5 Yrs to 2025
Best CaseDownside RiskBest CaseDownside Risk
Prime Central London5%0%10%5%15% to 35%
UK10%5%7%2%20% to 35%
Prime Central London5%0%5%0%10% to 25%


Source: Property Industry Eye

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HMRC: Residential transactions up 68.4%

Residential transactions in September stood at 160,950, 68.4% higher than September 2020 and 67.5% higher than August 2021, according to HM Revenue & Customs (HMRC).

The provisional seasonally adjusted estimate of UK non-residential transactions in September 2021 was 10,420, 20.2% higher than September 2020 and 8.4% higher than August 2021.

The provisional non-seasonally adjusted estimate of UK residential transactions in September 2021 is 165,720, 67.3% higher than September 2020 and 59.7% higher than August 2021.

The provisional non-seasonally adjusted estimate of UK non-residential transactions in September 2021 is 10,630, 17.8% higher than September 2020 and 17.0% higher than August 2021.

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John Phillips said: “As the UK housing market steadily edges closer to normality, property transactions are returning to familiar levels.

“There is no doubt that despite demand still desperately outweighing supply, the desire to move has not wilted for prospective buyers.

“Particularly those looking for larger homes as hybrid working models are adopted widely across the country and people seek office space at home. Buyers who find themselves in frenzied waters right now are – rightly so – making the most of low borrowing rates.

“As we look forward to the rest of 2021, it is safe to say that the number of buyers is not set to drop as people race to buy property before we see possible increases in interest rates.”

Stuart Wilson added: “Today’s findings are no surprise given the considerable activity witnessed in the run up to the conclusion of the stamp duty holiday.

“The holiday itself has been a resounding success, helping not only countless first-time buyers and second-steppers to move up the housing ladder, but also enabling silver spenders and last-time buyers to downsize, find more accessible housing, or move closer to family and friends.

“While the first-time buyer market was arguably the most buoyant, the stamp duty holiday encouraged more older borrowers to consider their options and we saw the tax break driving a 116% year on year increase in the number of people using equity release for property purchase.

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“This increase in borrowers using lifetime mortgages to fund purchase activity has been sustained even after the stamp duty holiday concluded at the end of September, suggesting that it was instrumental in driving awareness around this under-used benefit of lifetime mortgages. This is but one of its many healthy legacies.”

Richard Pike says “We are all on a bit of a roller-coaster ride at the moment.

“One moment we’re up and the next we’re down.

“The housing market climbed quickly to the top during the stamp duty holiday, then it dipped as expected, and now we’re heading up again.

“In reality, we’re still riding pretty high and house prices, as reported by the ONS, continue to climb as demand for properties with more space and away from city centres remains.

“Inflation may yet play its part and the Monetary Policy Committee will have a lot to think about in its next meeting.

“However, the economy is still fragile and, although raising interest rates may be the conventional way to put a lid on rising inflation, the question is, can we afford to hamper growth after such a long period of stagnation.

“We may well see interest rates rise in the coming months, but it is by no means a certainty.

“Coming out of the pandemic was always going to be a tricky time, but for now our market is weathering the storm while many other industries are taking the brunt.”

By Jake Carter

Source: Mortgage Introducer

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House price forecast: UK prices to stabilise in run up to Christmas

After a record breaking year, the housing market appears to have peaked and is set to cool, new research shows.

The latest Reallymoving House Price Forecast shows residential property prices will rise by just 0.1% over the final quarter of 2021 as the post-pandemic property market settles into a period of slower growth.

Prices will rise 1.3% in October, but decline by 0.1% in November and 1.1% in December. Conveyancing quote volumes are also on a downward trend, indicating a drop in buyer demand.

Conveyancing quote volumes continue to decline steadily, falling 4% between August and September, further indicating that buyer demand is settling back down to more normal levels.

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Reallymoving captures the purchase price buyers have agreed to pay when they search for conveyancing quotes through the comparison site, typically 12 weeks before they complete. This enables reallymoving to provide a three-month house price forecast that historically has closely tracked the Land Registry’s Price Paid data, published retrospectively.

It is estimated that house prices will rise by 1.3% in October as a result of deals agreed between buyers and sellers in July due to continued strong demand post stamp duty holiday and the limited supply of new properties coming on the market, creating greater competition for homes. This will be followed by a marginal fall of 0.1% in November and a larger drop of 1.1% in December, reflecting a drop in demand from buyers in the late summer as the post-pandemic property boom began to subside.

Following months of strong growth, house prices will rise by just 0.1% in the final quarter of 2021, bringing the average house price to £335,924 at the end of the year.

The shortage of stock as reported by agents is supporting property prices as the market adjusts to the end of all stamp duty incentives and the end of the furlough scheme, with the prospect of an imminent base rate rise an added incentive for buyers to get deals done as quickly as possible and secure a fixed rate mortgage deal while low-cost deals remain.

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Rob Houghton, CEO of reallymoving, commented: “A return to slower growth and a steadier housing market is welcome, but there are a number of factors converging which could knock consumer confidence over the coming months such as the supply chain crisis, rising inflation and living costs, plus the prospect of increasing interest rates – though it’s too early to see their impact in the data yet. While the reduced supply of new homes for sale is making things difficult, buyers who are ready to move now are keen to press ahead and lock in a fixed-rate mortgage deal, helping keep their borrowing costs low.

“First-time buyers who have found themselves increasingly priced out of the market will be encouraged by evidence that the post-pandemic property boom is running out of steam, with prices falling over the final quarter in five UK regions and less competition for starter homes now that stamp duty incentives are over.

“For those who have held off making their move due to the frenzied market conditions over the last few months, now is a good time to buy and lock in a five-year fixed rate deal that will insulate them from any imminent rate rises and make it easier to ride out any short-term inflationary pressures.”


Source: Property Industry Eye

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Residential transaction numbers grow 20% in August: HMRC

Government figures show that, totalling 98,000, residential transactions in the UK during August 2021 were 20.8% higher than in August 2020.

On a monthly basis, transactions of this type increased by 32%, the data adds.

It also shows that non-residential transactions, at 10,250, grew by 28.2% on a yearly basis in August – 5.8% when measured monthly.

This comes after HMRC reported transaction numbers slipping by almost 63% on a monthly basis in July.

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John Phillips says: “Property transactions are returning to a more recognisable level.

“The peaks and troughs of the past few months have been more erratic than in the past, but these should begin to level out as we move away from the stamp duty holiday.

“One thing that the latest data proves is that the tax savings were not the sole driving force behind the vast majority of moves.”

He adds: “Despite the end to furlough in a few weeks, vacancies have exceeded 1m for the first-time, so there are jobs out there, and the number of buyers is unlikely to fall significantly.

“Confidence in the economy is growing and people are now switching jobs, so this may test lenders criteria on probationary periods, but it is unlikely to be a significant blocker for many.”

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And Anna Clare Harper looks abroad in her commentary: “The Evergrande crisis highlights how over-leveraging can bring investors and homeowners down. Regardless of transactions data, prices can go down as well as up. A big cause of this is lending; just because you can borrow to acquire property with low deposits, it doesn’t mean you should. Buyers must remember that both capital and interest repayments must be paid.

“The good news for UK house buyers lies in a key difference between the Chinese property market and the UK property market: supply constraints. In the UK, we suffer an ongoing shortage of housing stock, which in turn means prices are expected to continue to grow.

“For this reason, although Evergrande is terrifying, and UK transactions rising and falling by 32% in a month seems volatile, the UK market is likely to remain more measured in its fluctuations,” Harper concludes.

By Gary Adams

Source: Mortgage Finance Gazette

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Strong property price growth ‘to persist through 2021’

Residential property prices in the UK accelerated in August, with values now 13% higher than before the pandemic, according to the latest data from Nationwide.

The building society said that annual property price growth sped up, to 11%, with the average home costing £248,857, with signs that prices could rise further.

According to the figures provided by Nationwide, property prices recorded their second largest month-on-month rise in 15 years, up by 2.1%.

The Nationwide’s chief economist, Robert Gardner, said: “As we look towards the end of the year, the outlook is harder to foresee. Activity will almost inevitably soften for a period after the stamp duty holiday expires at the end of September.”

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House prices in the summer usually see a dip as people’s attention turns to summer activities, but August has defied all odds with.

Nicky Stevenson, managing director at Fine & Country, commented: “This latest spike is stunning given that most analysts expected prices to decelerate as the stamp duty holiday entered its final throes going into the autumn.

“Those forecasts have now all proved wrong, and after a bumper summer which featured record borrowing, growth in Britain’s housing market still shows no sign of dampening.

“While the stamp duty holiday savings on big homes is quickly vanishing, a greater proportion of market activity is now in the mass market sector, buoyed by the resurgence of buy-to-let investing and first-time buyers.

“It is these sectors that continue to power double digit growth across the country.

“Based on this latest data, the market may well be running red-hot for some time to come, fuelled by low cost of borrowing, shrinking housing supply and government incentive schemes for first time buyers.

“The boom goes on.”

The widening supply-demand imbalance has also been a major factor in the housing market.

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Sam Mitchell, CEO of online estate agent Strike, said: “Let’s not forget that although the stamp duty holiday has ended, there is still a huge supply and demand imbalance issue in the UK, and the incentives that are still available – like the stamp duty savings still to be had for houses under £250,000 – are driving this imbalance further.

“The other incentives on offer will no doubt contribute to this too, with increased availability of 95% mortgages and low interest rates just some of the things that buyers can take advantage of. And who knows, the government might also have something planned to keep the market moving, but only time will tell!”

Lawrence Bowles, director of residential research at Savills, concurred: “There’s more to the housing market than stamp duty. Nationwide’s latest figures show robust house price growth in August, even with a less generous, tapered stamp duty holiday.

“Housing demand is still strong and the supply coming to the market is limited. There were 19% fewer homes listed for sale in the first half of August compared to the average for 2017-19, according to our analysis of TwentyCi data. There were 8% more sales agreed over that same period.

“As a result, we expect strong price growth to persist through 2021, though annual growth figures will ease back as we start counting growth from a higher, post-lockdown base. We expect annual house price growth to settle around 9% by the year end, with no reason to anticipate a correction in the coming years, particularly given the widely held view that interest rates will continue to remain low for the foreseeable future.”

Marc von Grundherr, added: “We’re seeing no let up in the extreme levels of house price growth seen in recent months. These hot market conditions are likely to remain beyond the summer months and well into autumn as we enter what is traditionally one of the busiest times of the year for the UK market.

“Of course, a slight dip can be expected come the end of the year. But those running for the hills at the first sight of a marginal monthly decline will do well to remember that even the best performing markets are subject to seasonal influences.”


Source: Property Industry Eye

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