The stamp duty holiday is finally coming to an end. On October 1, the land tax limit will return to normal. But in which state does it leave the property market? With record house prices rising and changes in what buyers are demanding, will the UK property market be the same again?
What is the impact of stamp duty leave?
Since its introduction in July 2020, stamp duty has revived the holiday housing market. We have seen house prices reach record highs. HMRC reported that the number of property transactions increased by 219% from June 2020 to June 2021.
Yet, it’s not just the headline statistics that we should pay attention to. Stamp duty vacations have also changed what buyers are looking for – and who can climb the property ladder.
The second home market, which started after the second lockdown, showed no signs of giving up. Knight Frank learned that the number of transactions responsible for the second home 3% surcharge in the year of suspension reached 84,700 in Q2.
But this is the first time buyers are getting lost. Rising house prices have made it much harder to climb the property ladder. GetAgent.co.uk found that the average home price bought by first-time buyers is now £ 236,982. This is an increase of 11.7%!
The higher the price, the larger the deposit the first time buyers will have to save. And with such a high demand for property, many of them are losing out.
So will this be the case for the foreseeable future?
Will things stay that way?
Has the stamp duty holiday changed the makeup of the UK market? It’s definitely a mixed thing in the short term. But that doesn’t mean the market will stay that way.
In reality, seasonal patterns have the potential to re-establish themselves. It is noteworthy that the stamp duty leave was just that One Part of the reason for the rise in house prices.
Paint-up demand from the first lockdown, mortgage rate price wars and the government’s 95% mortgage guarantee have all played their part.
And let’s not forget the key feature of the UK housing market: not having enough property to meet demand. There is no doubt that stamp duty leave has exacerbated this problem.
But this is something we the British have dealt with for a long time – and it is unlikely to change any time soon.
What is the market like going forward?
There seems to be a need for more accommodation to stay here. The epidemic has changed how we work or see our homes. Many homeowners want more space to work from a distance or want a second home as a place to stay.
There are also first-time buyers who want to climb the property ladder. Demand for this specialty has grown significantly as a result of recent corporate scandals.
Overall, some features of the stamp duty holiday are likely to be brought to the fore. But it hasn’t changed the essential makeup on the market. The existing strength of the UK housing market before the epidemic means that the bubble is not likely to burst any time soon.
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