On paper, the end of the stamp duty holiday is set to hit prime buyers the hardest, but the market remains resilient. The attitudinal change towards property that we’ve witnessed over the last 18 months means people now place a higher value on their homes, having spent more time there.
Last month, sellers in prime areas of the capital achieved 98.8% of their asking price, the highest proportion since February 2016. Southern sellers are achieving even more of their asking price, averaging 99.1% in September. However, this does represent a slight softening from the record 100.0% achieved during the height of summer. But the real question, is what’s likely to happen next?
As the year draws to a close, we expect price growth to slow across Great Britain. The experience of previous stamp duty holidays suggests that prices weaken when the concession is withdrawn. This is likely to be the case when the stamp duty holiday ends in September, but the decrease could be more modest than in the past.
In addition, there’s the ‘base effect’. Towards the end of 2020, the market was recovering; the average price was 6.1% higher than in Q4 2019. A lack of stock should keep annual price growth in positive territory, but this will be against a relatively high base.
By the final quarter of the year, we expect the average house in Great Britain to cost 4.5% more than the same time last year. This slowdown in growth is forecast across all the regions. We expect prices in Prime Central London to end the year up 1.0%, with 2.0% growth anticipated in prime areas of the South. The most rural prime areas in the South, which tend to still be more affordable, are likely to see the strongest house price growth as buyers seek more space and the commuter belt stretches outwards.