The Halifax is reporting a 0.5 per cent monthly drop in house prices, plus a fall in the annual rate from 9.6 per cent a month ago to 8.8 per cent now - so is the boom over?
“It is important to put such a moderate decrease in context, with average prices still more than £21,000 higher than this time last year, following a broadly unprecedented period of gains” explains Russell Galley, managing director of the Halifax.
“With the stamp duty holiday now being phased out, it was predicted the market might start to lose some steam entering the latter half of the year, and it’s unlikely that those with mortgages approved in the early months of summer expected to benefit from the maximum tax break, given the time needed to complete transactions.
“That said, with the tapered approach, those purchasing at the current average price of £260,358 would still only pay about £500 in stamp duty at today’s rates, increasing to around £3,000 when things return to normal from the start of October.”
Here’s how the industry has reacted.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Many of our customers caught not just the Covid but the home moving bug in the past 16 months. Fortunately, most recovered from the first but not the second so many continue to seek property which matches their changed circumstances. We don’t expect this new balance between supply and demand to change much over the next few months, particularly if economic growth can make up for the ending of the furlough scheme.”
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“The second half of the year is unlikely to bear much resemblance to the first half for the UK housing market. We expect house price growth to narrow to mid-single digits as tax breaks wind down and supply picks up. Comparisons with the global financial crisis are misleading given how low interest rates remain and the fact the mortgage market acts as more of a brake and less of a lubricant for housing market activity than it did in 2007” says Tom Bill, head of UK residential research at Knight Frank.
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“One month of falling house prices does not buck a trend and that trend, for now, is still up not down. For some, the easing of lockdown and the prospect of a summer holiday may take some heat out of the housing market, but others will be keen to move before the end of September and cathartically put Covid behind them” is how Anthony Codling, chief executive of PropTech platform Twindig sees it.
Director of London agency Benham and Reeves, Marc von Grundherr, comments: “Many are now starting to return to the workplace and foreign interest is also starting to build despite ongoing travel restrictions. You only have to look at London to see this slow but steady recovery in action. While the capital continues to lag behind much of the UK, the foundations being laid now will ensure that any impact due to the end of the stamp duty holiday is minimal, and house prices continue to climb throughout the remainder of the year and into the next.”
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Tomer Aboody, director at MT Finance, adds: “Regional areas beyond the capital have seen a large shift and hike in demand and prices over the past 12 months. Demand for more space is uppermost, which is hard to come by in the capital unless you have significant sums to be able to do so. Even though property price increases in London have been less stellar than elsewhere, prices are still at their highest in the capital and continue to rise, putting property ownership further beyond the reach of first-time buyers in particular.”
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“Many of our customers caught not just the Covid but the home moving bug in the past 16 months." Jeremy Leaf. You not lost anyone close to you?
come on ...................
Oh great, it has started. The press considering driving the self fulfilling prophecy of doom.
If the market gets talked down, there is only one direction it is likely to go.
Face it, stock is low, money remains relatively cheap, demand remains high, which direction should it continue to go?
Indeed..... until the industry press starts to state otherwise.
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