The UK property market saw activity continue to increase in August with the stamp duty holiday and pent-up demand after the market can to a total standstill being hailed as the drivers for this boost. House prices in England and Wales accelerated sharply in August, but when exactly will UK house prices fall again according to experts from the housing market?
Every part of Britain is now experiencing house price growth, except London, according to an estate agents report.
Buyer inquiries, agreed sales and new instructions all rose according to a monthly poll of members of the Royal Institution of Chartered Surveyors.
House prices in England and Wales rose sharply with respondents reporting higher rather than lower sale prices.
Prices in London have remained flat over the past two months.
The average number of properties per estate agent is at a historic low at just 42 which is helping to drive demand.
The UK Government temporarily cut stamp duty to kickstart the property market which came to a halt throughout lockdown.
This move means buyers could save up to £15,000 in tax if they move home before the end of March 2021.
Provisional data from HM Revenue and Customs (HMRC) shows that 70,710 property sales went through in July.
This figure was an increase of 14.5 percent on June’s figure, but a drop of 27 percent year-on-year.
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Chris Salmon, Operations Director of Quittance Legal Services, said the property market will likely slow down once the stamp duty comes to an end.
He said: “At this point in time property prices are at a 16 year high. This is mainly due to the current Stamp Duty Holiday that has pushed people once on the fence about buying property into action.
“People are looking to take advantage of this tax holiday, and once it ends we will expect the market to slow down again, resulting in lower demand and lower prices as a result.
“As the furlough scheme winds down, unemployment is likely to rise. The UK is officially in a recession and this will further subdue demand from buyers.
“As Stamp Duty Holiday only ends in March 2021, we might not see the housing market slowing down until then, and we are currently still working our way through the pent up demand that was brought about due to the pause in the market during May and June.”
Mr Salmon suggested the two biggest catalysts for changes in the property market are the end of the Stamp Duty holiday and the conclusion of the furlough scheme.
Speaking about the London market, Mr Salmon said: “Other than the end of furloughing and the stamp duty holiday, the embracing of remote working will affect the London market negatively.
“The extent of this depends on how far remote working is embraced.
“The trend of people, specifically younger people, moving away from London started a couple of years ago, and this will likely be accelerated. The rapid growth in nearby “commuter” towns may even slow down too if fully remote working is embraced.”
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Andrews Property Group group chief executive David Westgate said the housing market is experiencing a “mini-property boom” now due to “pent up demand, all-time low-interest rates and the stamp duty holiday”.
Mr Westgate said: “We are seeing huge demand for properties with gardens in the South West, particularly from London buyers looking to relocate while they can.
“The prospect of being cooped up long term in a small flat in the capital with no outside space, is driving a high level of enquiries from buyers looking for houses in less urbanised areas with decent sized gardens and easy access to the countryside.
“How long this property bubble will last depends on a number of factors, but it would be unrealistic to expect prices to continue on this upward trajectory through to Christmas.”
The property expert added a no-deal Brexit could impact consumer confidence and consequently affect the demand for houses.
He said: “There are some strong economic headwinds ahead that can’t be ignored.
“The furlough scheme is due to end next month, and with growing concerns over a second wave of Covid-19, and of course the dark cloud of a no-deal Brexit looming overhead, any one of these factors is likely to dent consumer confidence and put the brakes on house prices.
“To be honest, a little cooling down isn’t a bad thing.
“What we don’t want to see is unsustainable house price growth, and lenders have already reacted to this potential boom and bust scenario if house price growth carries on at this pace unchecked, until next March when the stamp duty holiday ends.”
Sam Mitchell, CEO at online estate agent Strike, said: “The speed at which the UK property market has bounced back has been remarkable.
“Pent-up demand caused house prices to reach new heights in August, and evidence of the government’s stamp duty holiday working its magic is clearly starting to show.
“On top of house prices making their comeback, sellers are receiving multiple offers and the time it takes to sell is dropping substantially.
“We’ve seen at least a 50 percent increase in demand from buyers now versus before lockdown, and on average we’re agreeing twice as many sales per week. It’s a seller’s paradise out there and now really is a great time to sell if you are thinking about it.
“Looking ahead, we’re expecting it to get even busier between now and the end of the year, with people rushing to agree offers pre-Christmas to exchange and complete in time for the stamp duty discount deadline in March.
“Come the new year, there are a lot of factors that may play a role — Brexit and the wider economy being the largest — and things may change.
“But for the moment, it’s safe to say I’ve never seen a market like it.”
Head of Property at North West law firm Jackson Lees Angela Hesketh said the industry is due to enter an uncertain time.
She said: “We’re about to enter another uncertain time for the industry as a whole and are essentially in a ‘holding position’ at the moment.
“Lenders and much-needed legislation changes to improve the home buying process hold the key to avoiding a house price crash, so we need to continue to assist people to borrow on manageable terms.
“We also need to improve the trust and stability in the market by updating what is an archaic process at times.
“While there’s the notion of buyers rushing to complete their purchase before March 31, it’s unlikely that the stamp duty holiday will be the single reason they’re making that purchase.
“In fact, the saving made from not paying the fee, or paying a reduced amount, is more likely to be an added bonus.
“It’s vital that people remain confident in the housing market and the buying process itself, so that we don’t see purchases tail off post-March.
“We should now be considering how the industry can be supported in the longer term to improve the home buying process, together with giving buyers access to funding at reasonable levels to build and maintain confidence – this is what will help secure the future of the market.”