UK House Prices Continue to Climb as Stamp Duty Deadline Looms
Since it was announced, the March 31 stamp duty holiday in England was predicted to result in a slow but steady decline in average property values. Following an initial rush of interest, the number of prospective buyers looking to purchase homes prior to the deadline has gradually diminished over recent weeks.
Nevertheless, new data from Rightmove suggests that not only is property market activity still relatively high, but that average house prices continued to rise throughout January and the beginning of February. Specifically, average property values increased approximately 0.5% over the course of a month, following three months of consecutive losses.
The data published by Rightmove tracked average property values from January 10 to February 6.
Property Purchase Intent Remains High
Compared to the same time last year, Rightmove reported an increase in website activity of more than 45% during the first week of February. Additionally, agreed purchase volumes for the same period of time were up by approximately 7%.
However, the number of new properties being listed on the market was down more than 20% from the same time last year. According to Rightmove, this could be partly to do with current lockdown restrictions forcing would-be movers to rethink their plans.
“As well as the current lockdown motivating buyer demand again, the restrictions have also been a factor in limiting new supply, leading to some modest upwards price pressure,” Tim Bannister, director of property data, said.
“These are strong signs that new buyer demand is not facing a cliff-edge after March 31.”
Buyers Seek Alternative Funding Solutions
The temporary stamp duty holiday, announced by the chancellor last year, renders all primary home purchases up to a value of £500,000 exempt from stamp duty taxation. In the weeks and months following the commencement of the scheme, buyers began scrambling to secure mortgages and purchase homes prior to its expiration.
As the countdown to the March 31 deadline continues, funding property purchases with conventional mortgages from major banks is no longer an option. With so many banks still dealing with a backlog of mortgage applications, there is insufficient time left to process new applications before the deadline.
This has led to many buyers actively seeking alternative funding solutions, such as bridging finance. Many types of specialist secured loans accessed via established brokers can reduce underwriting times to days, rather than weeks.
There is still time to take advantage of the stamp duty holiday though the help needed to purchase a property at short notice is rarely available on the High Street.