In July, UK house prices dropped slightly after hitting a 17-year high in June, something that Nationwide says is a result of the end of the stamp duty holiday.
However, despite prices dropping slightly, the average house price for July 2021 was still £244,229, 10.5% higher than in July 2020.
So, while the end of the stamp duty holiday has, in the words of Nationwide, “taken some of the heat out” of the UK housing market, prices remain high. The end of the stamp duty holiday has certainly reduced the amount of demand on the market, but today’s massive price rises have far outstripped any savings the holiday offered, so many buyers are persevering.
Nationwide’s Chief Economist, Robert Gardner, said:
“The tapering of stamp duty relief in England is also likely to have taken some of the heat out of the market,
“This provided a strong incentive to complete house purchases before the end of June, especially for higher-priced properties.”
The UK housing market remains very busy. The number of homes being purchased is higher than it’s been since 2005 and this is being driven by a growing desire to live in bigger, more spacious homes.
As such, the number of properties purchased for more than £500,000 increased by 37% between March 2020 and March 2021, compared to a rise of just 2% for all properties.
This disparity is largely because small, urban homes have fallen out of favour, especially flats and properties without gardens.
The avoidance of flats is also a result of the external cladding scandal that has arisen in the wake of the Grenfell Tower tragedy in 2017 – buyers are realising the limitations of leaseholds and therefore placing far more importance on buying a freehold property.
But, as with most things, property fashions are cyclical, so we should expect flats to, one day, come back into vogue.
Managing Director of Fine & Country, Nicky Stevenson, said:
“While the clamour in recent times has been for bigger properties with more outdoor space, we may see luxury apartments start to come back into vogue as the drift back to the office starts to gather pace in the big cities.”
Chief Executive of The Guild of Property Professionals, Iain McKenzie,, said:
“It is going to be interesting to see how the demand for properties changes as we come into the autumn.
“This will give us the opportunity to evaluate just how successful the stamp duty holiday has been at keeping the property market buoyant since the start of the pandemic.”
CEO of Keller Williams UK, Ben Taylor, commented:
“A severe shortage of housing stock, the low cost of borrowing and a high level of buyer confidence are the perfect ingredients to maintain what has been a pretty impressive run of house price appreciation.
“The widespread talks of a market cliff edge once the stamp duty holiday ends have now turned to hushed whispers and while record rates of growth will inevitably lead to some monthly ups and downs, the long-term health of the UK property market is looking very good at present.”