Back in July 2020, the government announced a stamp duty holiday that was designed to help first-time buyers and boost the housing market throughout the coronavirus pandemic. The tax-break started to come to an end from 1 July 2021, causing a last-minute rush to purchase a new home.
The holiday meant that tax on the first £500,000 of a home was temporarily scrapped, allowing potential new buyers to save up to £15,000. This caused a high number of opportunistic homebuyers to flood the market, leading to a boom in demand.
Property portal Zoopla reported that Britain was in the midst of its greatest stock shortage since 2015 as the number of properties for sale in June dropped by 26.4%. Despite a shortage in homes available, a record number of homes were sold the same month, with 213,120 sales registered with HMRC.
Unfortunately, however, with fewer homes being put up for sale due to Covid, the prices of homes available soared. Nationwide released figures earlier this year that revealed the stamp-duty holiday is partly responsible for the huge increase in house prices at the fastest rate since 2004, with annual house price jumping by 13.4% from £216,403 to £245,432 in June 2020.
Are House Prices Falling After The End of the Stamp Duty Holiday?
According to property experts, since the stamp duty holiday came to an end in July and more houses are being put up for sale, house prices have started to cool off.
Property consultant David Westgate said:
“The red-hot property market has definitely cooled a little, due to the partial removal of the stamp duty holiday.”
Mortgage expert Charlotte Nixon also commented on the prices of homes starting to drop but said they “still remain inflated”.
Will Prices Drop More in 2022?
According to the Centre for Economics and Business Research, it is estimated that property prices will drop by 14% by the end of 2021.
David Westgate also predicts a return of the stamp-duty holiday in order to “keep house prices in check and avoid the property market overheating”.
Missed the Stamp Duty Holiday?
Have you missed the stamp duty holiday but are looking to buy a new home? You could still benefit from reduced rates as the tax-free threshold is set at £250,000- double the usual allowance until the end of September.
However, it’s best to complete your sale quickly as from 1 October 2021, the stamp duty rate will return to the regular limit of £125,000.
The government also offers a Help to Buy: Equity Loan, that will help towards the cost of buying a new-build home as a first time buyer. You can also buy through the shared ownership, which allows you to buy a share of a property and pay rent on the rest if your household earns under £80,000 and you cannot afford all of the deposit and mortgage payments for a home that meets your needs.
For more help and advice, why not visit our helpful blogs or get in touch with our team at Ryans to find out how we can help you.