The housing market in England and Wales has shaken off the end of the most generous part of the stamp duty holiday, with prices set to lift by 1.7% month-on-month in October, according to data from Reallymoving.
The free home quotes firm says a rise in the values of new deals agreed in July following the end of the relief indicates that tax savings were not the main driver of recent home mover activity, in its latest House Price Forecast.
Instead, it says the drive to find larger homes in towns and new flexible working arrangements sparked by the pandemic, as well as low mortgage rates, are more important factors.
The firm said conveyancing quote volumes on its website peaked this spring at more than double the usual level but dropped by 18% in June and a further 21% in July to reach more normal levels for the time of year, “indicating it is likely to be activity at the higher end of the market that is fuelling a rise in the average house price”.
Its forecast is drawn from analysis of 24,000 conveyancing quote forms with agreed prices between buyers and sellers.
Reallymoving says it captures the purchase prices, typically 12 weeks before sales complete, allowing it to provide a three-month forecast that historically closely tracks the Land Registry’s Price Paid data, published retrospectively.
It says, following “an exceptionally busy spring market” which saw values rise strongly month-on-month, the prices agreed between buyers and sellers fell marginally in June, which it says will be reflected in Land Registry data this September, with a 0.1% dip.
But the home quote company says “this is likely to be little more than the froth coming off the market as the stamp duty holiday deadline approached, with buyers agreeing to pay less as they factored in the tax cost”.
However, “this dip appears to be short-lived”, with deals struck between buyers and sellers in July leading to a 1.7% increase in the average house price when they complete in October, “as once again demand bounces back and the housing market proves its underlying strength and resilience”.
Reallymoving chief executive Rob Houghton says: “This latest data allows us to see further into the autumn and once again the housing market is proving itself to be pretty resilient.
It’s becoming evident that the phasing out of the stamp duty holiday is not having a significant impact on prices, with buyer demand arising from new working arrangements, a reassessment of housing needs and low mortgage rates likely to be a much larger driver of continued activity.
“Low new supply of homes coming onto the market is also putting upwards pressure on prices.
“Our inaugural Property Market Intelligence Report which launched this month showing that house price inflation is much lower for First Time Buyers at 2.5% than upsizers at 10%.
“Home movers with more equity are in the best position to move to their dream home now they are less tied to the office and the daily commute. Yet FTBs shouldn’t despair at the sight of climbing prices.
“They are increasing far more slowly at the lower end of the market and I’d urge anyone wondering if they can afford to buy their first home to look at the specific data for their area and their buyer group, which may be more favourable than they think.”
On 1 July, the stamp duty nil-rate threshold was reduced from £500,000 to £250,000 until the end of September.
From 1 October, the threshold will return to £125,000 – or £300,000 for first-time buyers purchasing a property worth up to £500,000.
Chancellor Rishi Sunak introduced the tax relief last July to revive the housing market, which had stalled following lockdown restrictions.