When the stamp duty holiday ended on 30th September, the property industry could finally breathe a sigh of relief. The market surged following the introduction of the tax break, combined with the release of pent-up demand during the height of the pandemic. It successfully re-energised the market following its closure during the first national lockdown, keeping the economy moving. However, recent months saw many speculate on the future of the market following the stamp duty holiday deadline. Now it is time to consider what the end means for the industry.
Fears of a cliff-edge started to be heard at the beginning of the year, as the original deadline approached. With thousands of prospective buyers at risk of not completing in time to benefit, the number of purchases with the potential of falling through was concerning. These concerns fuelled calls from industry professionals to extend the planned deadline and taper it to avoid a hard stop. The thinking behind it was that it would give more purchases the chance to complete, which were already in progress. When the extension and subsequent tapering were announced, the industry rejoiced. Although a minority of transactions did fall through, the completions prevented a knock-on effect for the rest of the market.
The shortage of properties coming to the market is now in a fifth consecutive month. Latest reports show current numbers are lower than pre-pandemic levels, with prospective buyers remaining motivated to make their purchases. But, while demand remains high, property prices have also risen. The average house price has increased by almost £30,000 since June last year, one month before the introduction of the stamp duty holiday. While purchasers persist to buy their next properties, house prices may be set to increase further. This inflation has raised concerns for the future of house prices, but the market has not yet run out of steam. However, prospective sellers may still be encouraged to list their properties. At present, the market is less frantic from not being in the height of the pandemic, is more appealing to sellers.
The seller’s market is predicted to remain for a few more months at least and could span into the new year. However, if conditions remain as they are, the buyer’s frenzy is likely to wane. While this may not result in property prices going down, it will help achieve equilibrium in the market. Still, many uncertainties remain, such as the possibilities of potential future lockdowns. Another lockdown could spark the same desire in people to move on from their current property and reignite the market. This could delay the hope of achieving balance in the market considerably, but only time will tell. After a turbulent 18 months across the property industry, a sustained and stable market is something we are all eager to see.
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