Market back to normal by autumn as stamp duty effect falls away

A major agency is predicting that the imbalance between supply and demand, which has characterised the housing market for all of 2021 to date, will not last beyond the summer.  

Knight Frank, citing its latest figures, says the combination of a lull following the stamp duty holiday and the summer break means one key indicator of demand reached its second-highest level in seven years in July.

The ratio of new buyers to new properties listed in the UK last month was 12.7. That figure was last higher in January 2020 (14.6), the first full month of the short-lived ‘Boris bounce’.

The agency says the more prospective sellers will make up their minds on committing as they return from the summer holiday, meaning this particular ratio will fall.

The number of UK exchanges in July was 21 per cent below the five-year average, a number that Knight Frank says is unsurprising given the scramble to complete in June. However, the number of new prospective buyers was 42 per cent higher than the five-year average, showing how much demand remains in the system. 

Meanwhile, the number of instructions to sell was down 28 per cent over the same period, demonstrating how supply and demand headed in opposite directions in July.

The agency feels this mismatch is unlikely to remain in place against a backdrop of continuing low mortgage rates and more optimism over the wider economy - and what it calls “the creeping return of normality.”

“In the real world, it means a sneaking sense that the worst of the pandemic is behind us” says Knight Frank, adding that double digit house price grownth is likely to slip back to single figures by Christmas.

“Sellers may benefit from more buoyant prices if they act sooner rather than later” it concludes.