UK Housing Market: A year in Review

On 8 July 2020, and after easing of restrictions imposed during the first UK lockdown of 23 March 2020, the government lifted the Stamp Duty Tax threshold to £500,000 for a limited time – until 31 March 2021.  Following this measure, the market recovered with increased sales completions and a rising house move demand. There was a noticeable spike in demand for terraced, semi-detached and detached mid-range properties - often in commutable city and town suburb locations, i.e. larger homes outside London priced between £450,000 and £800,000. There were more buyer enquiries, more new listings, and there was a strong property price growth. Halifax Building Society reported at the time that the UK August house price was 5.2%  higher than in the same time 2019.

31 October 2020 saw the second national lockdown, but the market remained resilient supported by low interest rates, stamp duty holiday incentives and a strong demand for the rural locations and dwellings with larger and flexible living space.

The UK housing prices reached a four-year high in November 2020, followed by the ONS report for December 2020 (published in Feb 2021) which stated that England house prices grew by 8.5% in the year to December 2020.

After the third lockdown (6 January 2021) the property market growth slowed down. The UK house price index report with data for January 2021 states that the average house prices in the UK decreased by 0.5% between December ‘20 and January ’21. Still, the average price of a property in England was £266,532 with the annual price change of 7,5%, and the monthly price change: -0.6%.

At the time, most property professionals shared the view that the much-needed stamp duty holiday extension looked unlikely.  But, on 3 March ’21 the Chancellor of the Exchequer presented the Budget 2021 announcing that the increased Stamp Duty Tax threshold, would be extended to 30 June 2021.

The higher house prices in March ’21 are contributed to the rush to complete transactions before the original tax (Stamp Duty Holiday) suspension deadline. According to the Global property market insight by Knight Frank, ‘UK transaction numbers reached a record level in March, taking the total annual spend in the housing market to levels not seen since before the global financial crisis.’

Looking at the first half of 2021, two indicators have been highlighted by property professionals: the high number of UK property transactions and the sales price growth. Changes to both have been substantial and have been shaped primarily by The Stamp Duty or, the rush to complete sales and purchases before the tax relief deadlines.

The latest 2021 industry comments related to the last four months to 31 May 2021, state that the residential property transactions for the period were the highest since 2007. ‘Total HMRC tax receipts in the last 12 months exceed pre-pandemic receipts for the same period in 2019. ‘Total HMRX receipts in the last 12 months to 31 May 2021 are at 630bn which exceed the pre-pandemic receipts for the same 12 months to 31 May 2019 (624bn).’

The extraordinary UK property year ends on 30 June 2021. The tax relief amount will be reduced to the first £250,000 of a purchase, which in turn will end in September 2021, before returning to its pre-pandemic level of £125,000.

By many analysts, the UK property market is heading to another dramatic period likely to see a significant drop in new instructions, transaction levels and price growth. The return to a less dramatic transaction number changes is expected by Q4 of 2021.

For the latest UK property Sales market updates contact our experts:sales@chaseevans.co.uk

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