In March 2021 the number of homes sold in the UK hit a record-high, as people rushed to complete before the end of the stamp duty holiday. According to HMRC, the month of March saw around 180,690 transactions recorded, which is the highest number since records began in 2005.
This increase in activity caused a rise in house prices of 8.6% within a year, according to the Office for National Statistics. During the coronavirus restrictions and lockdowns the housing market defied expectations, and property experts – such as Zuneth Sattar – have seen it flourish during the pandemic.
The dramatic rise in UK house prices was due in part to the stamp duty holiday introduced by the government, in addition to the ‘race for space’ that was inspired by more and more buyers wanting larger homes and gardens. The average price of a detached property increased by 9.1%, whilst maisonettes and flats increased by 6.7% over the same period – showing the desire for more space.
The Stamp Duty Holiday
Introduced as an initiative to support the property market following the first lockdown, the stamp duty holiday offered house buyers a saving of up to £15,000 as the threshold for stamp duty was raised from £125,000 to £500,000. The holiday was due to end on the 31st March 2021, yet there was such a rush to complete house sales that the government decided to extend the holiday until the end of June 2021, phasing it out rather than having a hard deadline.
As the stamp duty holiday comes to an end, property market experts are expecting it to remain buoyant. The government has launched another scheme that is designed to help first-time buyers and those at the bottom of the chain to access the market. The government-backed 95% mortgage scheme will help to keep the property market active as the stamp duty holiday finishes, as will the structural forces that caused a rethinking amongst homeowners, leading many to assess their property needs.
As the world recovers and lockdown is lifted, many people will continue to work from home. Many homeowners are also finding that their property no longer suits their lifestyle, which should keep the property market busy in the short and medium-term.
Record-High House Prices
The UK House Price Index is calculated using data from HM Land Registry, Land and Property Services Northern Ireland, and Registers of Scotland, to give an indication of house price inflation each month in the UK. For further information about the function of the UK House Price Index, please refer to the embedded PDF.
The February 2021 report showed an increase in average house prices of 8.6%, which was the UK’s highest annual growth rate since October 2014.
The highest increase was found in England, where house prices grew by 8.7%, bringing the average price to £268,000. Within England, the North West was the region where house prices rose most dramatically (11.9%), with London seeing the smallest increase (4.6%).
Wales had an increase of 8.4%, making the value of the average house in Wales £180,000, while Scotland increased to £162,000 thanks to an 8.0% increase. Northern Ireland had the smallest increase in house prices, growing by 5.3% to reach an average price of £148,000.