ouse prices to ‘soften’ in early autumn - ‘slowdown is inevitable’, claims expert
HOUSE PRICES are set to "soften" in early autumn as the property market boom begins to slow down across the country. A property expert said the "slowdown in growth was inevitable".
By MILLIE BULL
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House prices have continued to boom over the last few months with the average price agreed for a home hitting £330,279 in June 2021. Reallymoving is predicting that this will increase to £342,767 in July 2021 and £344,264 in August 2021. The reallymoving house price forecast which was released yesterday has predicted that house prices will grow in England and Wales by 3.8 percent in July with the rate declining in the following months.
In August, the forecast has predicted growth of just +0.4 percent with negative growth of -0.1 percent expected in September which will take the average price agreed down to £343,968.
According to reallymoving, the market begins to flatten in the early autumn which correlates with the end of the stamp duty land tax (SDLT) holiday.
Once the SDLT holiday comes to an end, it’s likely there will be less competition for homes and buyers may be less likely to pay more for homes if they have to pay the property tax.
The stamp duty holiday threshold was reduced on June 30.
House prices to ‘soften’ in early autumn - ‘slowdown is inevitable’, claims expert (Image: GETTY)
house prices uk property market
House prices: "The data indicates that the market is softening" (Image: GETTY)
Following this, it was reduced to £250,000 and will remain at that amount until September 30.
On October 1, it will return to the previous level of £125,000.
Rightmove, the UK’s largest property site, found that there is a 225,000 shortfall in the number of new properties coming to the market.
Reallymoving said there will likely continue to be a lack of new stock coming to the market which will support prices throughout the summer.
The rate of annual growth is showing a similar trend to monthly figures, falling from +15.7 percent in August to +6.3 percent in September – a decrease of more than half.
Reallymoving looked at the purchase price buyers have agreed to pay when they search for conveyancing quotes through the comparison site, typically 12 weeks before they complete.
The site was able to provide a three-month house price forecast.
Rob Houghton, CEO of reallymoving, said a “slowdown” in house price growth is “inevitable”.
Average house price falls due to stamp duty holiday being ‘phased’ out
He added: “Looking ahead over the next three months, the data indicates that the market is softening which will be reflected in completed sales data heading into the autumn.
“With the influence of the stamp duty holiday now largely expired alongside early signs that buyer demand is returning to more normal levels, we can expect prices to follow suit and return to a more stable trajectory.”
Despite house prices slowing down, Mr Houghton said he thinks the property market will continue to “perform well”.
The rise in home-working, a shift in buyers’ needs and a move away from urban locations is likely to continue driving the market.
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Residential property prices
Residential property prices (Image: EXPRESS)
Mr Houghton said: “Working arrangements for many people are yet to be tested and finalised, with the rise in home-working no doubt continuing to drive home movers for some time to come.
“There will be a contingent of buyers who realised pretty quickly that rising prices were wiping out any tax savings and decided to hold off until the market cooled, who, along with First Time Buyers who largely didn’t benefit from the stamp duty saving, may decide to make their move later this year.”
First time buyers paying £300,000 or less for a residential property also don’t have to pay Stamp Duty Land Tax (SDLT).
They will, however, have to pay between £300,000 and £500,000 of SDLT at five percent on the amount of the purchase price in excess of £300,000.