Despite imminent end of tax break
Given the expected loss of market momentum with the impending end of the tax holidays, Rightmove’s whole-of-market view shows some surprisingly buoyant data. After three consecutive monthly falls, the average price of property coming to market has risen by 0.5% (+£1,522) this month. This is being fuelled by both a shortage of supply with fewer new sellers coming to market, and increased demand, with all indicators of buyer activity being ahead of the same period last year. This new buyer demand surge is building momentum, and as it is now far too late to realistically complete a new purchase before the stamp duty holiday ends on the 31st March, it would appear that many buyers’ desires to move are not dependent on the potential saving.
Tim Bannister, Rightmove’s Director of Property Data commented this week: “Last year the market was unexpectedly buoyed by buyers’ determination to move and satisfy their new lockdown-induced housing needs. We may well be seeing a continuation of that this year. Rightmove’s early 2021 buyer data shows that despite the imminent end of the stamp duty incentive, all of the key buyer metrics are ahead of early 2020, itself an active period as the market was boosted by the post-election ‘Boris bounce’. As well as the current lockdown motivating buyer demand again, the restrictions have also been a factor in limiting new supply, leading to some modest upwards price pressure. These are strong signs that new buyer demand is not facing a cliff-edge after the 31st of March. It remains to be seen if this momentum will be enough to make up for the removal of the stamp duty savings that are benefitting many buyers and have been adding a sense of urgency to the whole market.”
Rightmove estimates that there are around 100,000 buyers who agreed a purchase before Christmas but will fail to complete by the stamp duty deadline, and will be faced with a tax bill that they may not have factored in when they agreed to buy the property. Rightmove’s latest analysis shows that of those buyers who agreed a purchase during the month the stamp duty announcement was made in July last year, one in five of them are still stuck in the logjam, more than six months later. This is double the proportion of the previous year when only one in ten purchases that were agreed in July 2019 were still waiting to complete at this time last year. Even if you agreed a purchase the day after the stamp duty holiday was announced, with just six weeks to go, you may still be at risk of losing out by not having enough time to meet the deadline.
Buyer demand was ahead of the same period in 2020 throughout January and is even stronger in all key metrics for the first week in February compared to a year ago. Despite the very minimal chance of benefitting from the stamp duty savings, the number of purchases agreed is currently up by 7%. The pipeline for future sales is looking even stronger, with the number of prospective buyers sending enquiries to estate agents up by 18%, and the number of visits to Rightmove up by 45%. This high buyer demand is outstripping new supply and helping to edge up prices despite the challenging economic backdrop.
At the time of writing there is speculation an extension of the Stamp duty ‘holiday’ may be forthcoming in the chancellor’s spring budget – much to the relief of many buyers!