An unexpected short-term property boom has seen the price of the average British home hit a record high.
The UK property market had already been recovering from lockdown at an extraordinary rate and the announcement of the stamp duty holiday has further spurred the market. Property website Rightmove found that the average asking price of homes was up £7,640 in July from £320,265 in March. Rise in prices of 3.7 per cent year-on-year. Miles Shipside, of Rightmove, said vendors were using the “window of opportunity” created by Chancellor Rishi Sunak’s decision to increase the price at which buyers pay no stamp duty from £125,000 to £500,000 plus pent-up demand due to a freeze on the market during lockdown.
Rightmove’s figures showed that the number of sales agreed in England this month was 15 per cent higher than this time last year, and that property transactions were 35 per cent higher versus 2019 in the days since the stamp duty cut came into force. Of the 92,085 listings that have come on to the market in England since May 13, 44 per cent are now marked as sale agreed, compared to just 34 per cent in the same period last year, Rightmove said. Buyer inquiries since the start of July are 75 per cent above the 2019 level. However, the supply of homes for sale in Britain increased by 11 per cent in July but is still 13 per cent below March levels, showing that many potential sellers still remain cautious.
Analysts have warned of a worsening economic outlook later in the year, and predict prices could fall by almost 11% as the furlough scheme ends, unemployment increases, and many buyers find it more difficult to secure mortgages. The “stamp duty holiday” will end in March next year.
An economics consultancy, the Centre for Economics and Business Research, had previously forecast an 8.7 per cent house price drop in 2020, followed by a return to growth at a rate of 1.4 per cent in 2021. Upon announcement of the stamp duty holiday, it has revised its forecast to a drop of just 5 per cent, concentrated at the end of this year. It has predicted the majority of the falls would be pushed into next year as the market contends with the end of the stamp duty holiday and prices are expected to fall 10.6 per cent.
Davies McGrath Law
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