The stamp duty holiday and pent-up demand have led to a stampede into the housing market, with 140,000 more buyers currently waiting to complete their property transactions than a year earlier, according to a new report.
The high demand saw UK house prices jump again in September by three per cent year on year, the latest house price index from property website Zoopla showed. It was the strongest growth in two and a half years.
Britain’s housing market has been a surprising bright spot in the economy this year. It was closed for much of the spring at the height of the UK lockdowns. But demand built up during that time and is still boosting property transactions.
Chancellor Rishi Sunak’s stamp duty holiday, which raised the payment threshold for the tax to £500,000, has also fuelled the market. The policy offers savings of up to £15,000.
Zoopla today said the number of house sales agreed had hit a record high “as buyers rush to meet the stamp duty holiday deadline” on 31 March.
More than 400,000 property sales worth £112bn were working their way through the pipelines in October, Zoopla said. That figure was up around 50 per cent compared to a year earlier.
However, sales had slowed slightly from previous months, the index showed. In August, sales had been running 62 per cent higher than a year earlier.
“The stamp duty deadline will focus the minds of committed movers in the near term,” said Richard Donnell, research and insight director at Zoopla.
He said this would “support sales volumes and make for a strong first quarter of sales completions in 2021”.
Donnell said buyers who hope to complete their deal before the policy ends but wait until January “will be cutting it fine”.
UK house prices soar – but will it continue?
London house prices rose by 2.6 per cent in the year to September. That compared to the national average of three per cent.
Many analysts have argued that Sunak’s stamp duty holiday has simply “brought forward” transactions into a shorter period. They say that transactions will dry up and UK house prices will fall when the policy ends.
Zoopla said: “Stamp duty changes always distort market volumes to some degree”. But it said it thought the “once in a lifetime re-evaluation of housing” amid coronavirus had been a greater driver.
“In our view, the latent demand for housing that has been unlocked by Covid… has the potential to run into 2021.”
The report also highlighted how the strength of the market was masking the impacts of the recession. It said that there had been a “relative decline” in the share of sales recorded among poorer people.
The change in the mix of sales has been stark, Zoopla data showed. There was an 18 per cent drop in sales among the poorest over September to October compared to the five-year average. By contrast, there was a 19 per cent jump in sales among the most affluent.