New research shows that several London boroughs are likely to be the most affected parts of the country when the stamp duty holiday ends in June and potentially causes house prices to fall off a cliff edge.
As Nationwide reveals that April 2021 saw the biggest monthly rise in house prices for 17 years, industry eyes are now fixed on the end of the stamp duty holiday which is currently scheduled for June 30th.
There is concern that when the holiday ends, demand for homes will slump and prices will crash, ending an unprecedented year of demand and growth.
Now, new research from GetAgent attempts to predict which areas of the UK will experience the most significant drop in property values when the holiday deadline arrives. They have done this by analysing how regional markets reacted to the approaching deadline when it was initially scheduled for the end of March.
The City of London saw the biggest decline in prices between November 2020 to February 2021, when prices dropped by an average rate of -4.6% per month. In Hammersmith and Fulham, prices dropped by -3.6%,, and in Kensington & Chelsea, they fell by -2.6%.
Outside of London, it seems that Lancashire is set to experience the most profound price decline.
Hyndburn, an area situated near Blackburn, saw an average price decline of -3% per month, while Fylde, which is found near Blackpool, saw a -2.1% drop.
Completing the list of markets that could be hit hardest by the deadline:
- Flintshire (Cheshire)
- Oadby & Wigston (Leicestershire)
- The Cotswolds
- South Tyneside
- Neath Port Talbot (Wales)
- Exeter (Devon)
- Tower Hamlets (London)
- Darlington (County Durham)
- Wokingham (Berkshire)
- Carlisle (Cumbria)
Founder and CEO of GetAgent.co.uk, Colby Short, said:
“Much was made of the potential property market crash landing that awaited us at the stamp duty holiday finish line. That was until Rishi Sunak swooped in to save the day with his red briefcase of tricks, of course.
“However, we’re now able to see just how the market was reacting in the run-up to the original deadline and before an extension was announced, and it’s clear that cracks were already starting to emerge in a number of locations across England and Wales.
“The good news is that a tapered exit has now been put in place in order to soften this landing, however, the impact is still likely to be felt more in some areas compared to others. It will be interesting to see if it makes much of a difference in the areas that were already showing signs of a decline in February of this year, or they will still feel a greater level of turbulence.”
Nothing set in stone
While GetAgent’s research gives us fascinating foresight regarding how the UK’s regional markets might react when the stamp duty holiday ends, it’s important to remember it’s a prediction, not a fact.
If the government does not further extend the deadline and the stamp duty holiday does indeed end in June, it’s still impossible to know how the market will react.
GetAgent’s research was conducted during a time when COVID had its tightest and deadliest hold on the UK. Now that we appear to be approaching the end of the pandemic and vaccines are being rolled out at speed, people might feel more confident about getting involved in the homebuying process, thus maintaining the high demand we’ve seen for the past year.
Furthermore, first-time buyers account for a decent proportion of market activity and never have to pay stamp duty for purchases below £500,000 regardless of when the current holiday ends.
Only time will tell.