Housing Market Cooled Off When Stamp Duty Holiday Ended

Housing Market Cooled Off When Stamp Duty Holiday Ended

Experts have been awaiting the data associated with the ending of the stamp duty holiday. The discount had been put into place to assist home buyers during the start of the pandemic. Keeping the housing market active would be vital to the health of the economy and it was hoped buyers would be motivated if there was an opportunity to save. It turned out that the stamp duty holiday and low interest rate levels were definitely motivators. The UK housing market surged and at levels that broke records for volume of sales.

The stamp duty holiday was supposed to end in March of this year, but it was extended. The extension saw the discount reduced the end of June and then completed at the end of September. 

Prior to the ending of the deadline the housing market was busy. Buyers were purchasing homes despite the higher asking prices that resulted from higher demand and lower supply. It was not yet possible to determine if the boost in the market was due to the coming end of the stamp duty holiday or simply buyers choosing to purchase at that time.

According to a recent report from HM Revenue and Customs (HMRC), the UK house sales fell by 52% in the month following the stamp duty holiday deadline. October was reported as the slowest for property sales since 2012 at 76,930 in volume. In the year to year comparison there was a 28% sales decline from October 2020.

Despite the rush to save before the deadline, the housing market was not actually slowing down. It was instead a reveal of the many that sought to buy and save before the end of September. The market has continued to thrive and is expected to do so as long as interest rates remain attractively low.

Due to the warnings that interest rates may begin to rise as early as the beginning of next year, many hopeful homebuyers are likely taking notice. Lenders are offering competitive deals making the opportunity to borrow cheaply a strong motivator despite rising asking prices.

First time buyers could be the strongest buying group as home movers are less likely. Most homeowners seeking out an upgrade in property space which is still a top priority of buyers may have already purchased their pandemic lifestyle home. Staying put has become a strong choice as homeowners also have the ability to borrow cheaply and save substantially with a remortgage. 

Homeowners choosing an equity cash release remortgage are not only finding they could save money with a lower interest rate deal, but have cash on hand due to property value increases. Most have reported using the cash to upgrade and improve their home. In some cases, those improvements could increase the value of the property even more.

The holidays often bring a quiet rush to the housing market. For some it is buying a new home to make holiday memories or to move into a home that is better suited for winter weather. There can be as many reasons to buy during the end of the year as there are buyers, but perhaps this year the top reason will be to do so because interest rates are historically low.

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