Back in early March, the housing sales market was thriving, with sales asking prices pushed to a record high of £312,625, up 3.5% from the same period in 2019. Following the coronavirus pandemic, this slowed as many home movers had to delay their move; Zoopla recorded 373,000 paused property transactions due to lockdown restrictions.
But the property market didn’t stop entirely. Estate agents kept working, with virtual tours and digital offerings keeping interest going. And in May, as lockdown started to ease and the property market reopened for viewings, pent-up demand led to a surge in movement for house sales. While the sector had expected to see postponed moves pick back up, the past two months have additionally seen huge levels of enthusiasm from new buyers and sellers, leading Rightmove to record its 10 busiest ever days for new home enquiries in May and June.
The increased Stamp Duty threshold offers significant savings
Driving demand in the housing market even further is the new Stamp Duty holiday, as announced in Chancellor Rishi Sunak’s summer statement. Under the increased threshold, property sales under £500,000 in England and Northern Ireland will be exempt from the duty until 31st March 2021.
With the value of the average property in the South East at £560,000 and at £890,000 in London, the Stamp Duty holiday could therefore mean savings of up to £15,000 for buyers of properties in this price bracket. Meanwhile, buyers could save around £7,500 on Stamp Duty for properties valued up to £350,000.
These are substantial savings which can make a house move more affordable for many buyers where it previously may not have been possible. It also opens the door for house buyers to spend more on upgrades to bigger, or better properties – or those in more desirable locations – getting the housing market moving at all levels.
The Stamp Duty holiday has boosted market activity
Since the announcement, demand for house sales has only grown, as many buyers and sellers who weren’t considering a move post-lockdown reconsidered in the wake of the announcement. As a result, buyer enquiries are up 75% year-on-year. Asking prices have risen further, up to £320,265 in July, and buyers are now offering 97.7% of the asking price on average.
This is good news for all: it means we are seeing increasing numbers of buyers wanting to make a move and more properties to choose from for every potential new buyer.
The March 2021 end date for the threshold increase also means we will likely see movement in the marketing in Q3 this year as buyers look to make the most of the savings on offer. According to View my Chain, the house moving process takes up to 120 days, from advertising a property on the market through to completing the sale. This equates to four to five months, so those looking to sell should put their property on the market by the end of September. Those buying will need to have made an offer ideally by November or December to take advantage of the Stamp Duty holiday.
Homeowners are looking to escape to the country
Covid-19 has changed house buyer priorities, with many now prioritising bigger homes with gardens and a separate space to work from home.
As many of us continue to work remotely, property owners no longer want or need to commute into big cities five days a week or live in urban environments closer to offices. As a result, we are seeing a real demand to escape cities and live in larger properties and more rural locations providing green space.
Rightmove has recorded a sizeable 126% year-on-year rise in enquiries from city residents about village homes for sale across June and July with Liverpool seeing the greatest increase in village property enquiries at 275%. And we’ve seen further evidence of those looking to leave big cities as 50% of Birmingham residents and 46% of those who live in Bristol have searched for property elsewhere in the past few months.
Will the changes make a difference for first-time buyers?
Unlike previous initiatives, this move from the Government doesn’t particularly target first-time buyers. Those buying their first property in England are already exempt from paying Stamp Duty for properties of up to £300,000.
However, this move will benefit those first-time buyers who are looking at a higher value property. It may also provide more space for those who are looking for a larger first home away from a city. Just as we have seen the demand for more space and gardens grow, we have also seen houses increase in demand over flats.
Also included in the Chancellor’s summer statement, the £2 billion Green Homes Grant will provide homeowners and first-time buyers in England with vouchers for green improvements to their properties, such as wall and loft insulation, draught proofing and double glazing. The scheme can fund two thirds of the cost of green works for up to £5,000 per household. When combined with the increased Stamp Duty threshold, this will further encourage buyers to enter the market or make a move and make significant savings, as well as gaining an improved quality of living, a potential reduction in fuel bills and an increased in property value.
Confidence is growing in the housing sales market
There is no doubt that the Stamp Duty holiday is a great window of opportunity for investors to save thousands over the next few months. But beyond that, the news from the summer statement is welcome to reinvigorate the UK housing market. Prospective home buyers should act now to make a move that suits them and benefit from the current growth in the housing market and the substantial savings the Stamp Duty holiday provides.