Will house prices go down as Stamp Duty holiday ends? Experts weigh in
Budget: Sunak announces stamp duty nil rate extension in March
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The Stamp Duty holiday was brought in by Chancellor Rishi Sunak in July last year, and it was originally due to end on March 31, 2021. However, in this year’s Budget, Mr Sunak extended the holiday and announced it would taper off rather than abruptly end.
When will the Stamp Duty holiday end?
From July 1 to September 30, 2021, the Stamp Duty holiday now operates at a reduced rate.
People buying a property in England will not pay Stamp Duty on the value of residential property up to £250,000.
But from October 1 onwards, the nil rate band will return to the previous standard amount of £125,000.
With the Stamp Duty holiday still in place, experts say many people are still looking to move house at the current time.
Sam Mitchell, CEO of online estate agent Strike, commented: “It has been 18 months like no other for the UK property market, but some may be wondering how house prices will fare now that the Stamp Duty holiday has come to an end.
“Let’s not forget the tapering off period is still in place until the end of September, meaning properties valued under £250,000 still benefit from the relief.
“What’s more, there are plenty of other incentives at play to keep the property market moving, including the increase of 95 percent mortgage offers combined with low-interest rates.
“The fact remains that the pandemic has forced a change of lifestyle for many, and with this has come changing needs for a property.
“Despite some now returning to work, we’re still seeing increased numbers seeking a more rural area with extra space – and this trend is likely to stay for the long term.”
How will the Stamp Duty holiday end affect house prices?
It is difficult to know for certain exactly how house prices will be affected by the end of the Stamp Duty holiday in September.
However, some property experts think the end of the Stamp Duty holiday could prompt house prices to drop.
Pete Mugleston, MD and mortgage expert for www.onlinemortgageadvisor.co.uk, told Express.co.uk: “For the first time in a long time, house prices have started to fall.
“While those looking to sell their properties aren’t going to be thrilled that house prices have slipped, even by as little as 0.5 percent, this is good news for buyers and the market.
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“It means that many who may have struggled in recent months to purchase a property, with house prices increasing so much and with houses selling before even officially hitting the market, things may begin to level out now, making it a much fairer market for all – not just those with the most money.
“Even though house prices are still higher than they were pre-pandemic, the fact that they have started to decrease is definitely a step in the right direction for the property industry to be able to catch up with the extremely high demand that we’ve all witnessed over the past 15 months.
“We wouldn’t be surprised to see a small monthly drop in house prices from now until the end of the year, more so in the last few months of the year as the Stamp Duty extension is phased out which is going to be incredibly beneficial for those looking to buy, especially first-time buyers.”
Ross Counsell, chartered surveyor and director at GoodMove, told Express.co.uk people can “expect to see house prices finally begin to decrease” as lockdown eases, but as the market is “volatile”, prices rising could also be a possibility.
Mr Counsell said: “Demand for properties soared unprecedently throughout lockdown and into 2021, with more people looking to move into more spacious, rural properties and away from flats and smaller properties in our cities.
“The increase in home buyers was also fuelled by the Stamp Duty holiday, but now with the end of the Stamp Duty Holiday in September 2021, and the fact that many people have already moved home that were looking to due to lockdown, can foresee a decline in house prices going into 2022.
“During the lockdown, demand outweighed supply as many sellers were apprehensive about selling due to anxieties surrounding COVID-19.
“As with every supply outweighing demand scenario, scarcity meant prices began to inflate and with high demand comes high prices, which is the phenomenon we have seen in the house price statistics over the past year.
“Moving forward into 2022, we can expect market supply to increase and there to be fewer buyers looking for property, which should help towards lower house prices.
“However, it is important to consider that the market is pretty volatile at the moment and therefore it’s hard to predict just exactly what is going to happen.
“With the British economy recovery going on between Q3 and Q4 of 2021, there is always the possibility that house prices could, in fact, begin to rise again – although not at the same unprecedented rate as we’ve seen in 2020 and 2021.”
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