Wales continues to record the strongest house price inflation of any UK region or nation, with annual growth of 11.5% in September and has an average house price of £194,286.
In June 2020, the month before the stamp duty holiday began, the typical standardised price for a UK property was £239,317. Therefore a home-mover would have faced SDLT costs of around £2,300.
From July last year, the zero rate introduced on homes valued up to £500,000 (falling to £250,000 between July and September this year as the holiday was tapered out) meant no stamp duty would be payable on that same property.
By September 2021, average house prices were some £28,270 higher – more than 12 times greater than that initial saving. Today, with the tax break over, home-movers face a bill of nearly £3,400 for the same property, as with an average price of £267,587, they’ve also now been pushed into a higher SDLT bracket (tax rate of 5% applies between £250,000 to £925,000).
Russell Galley, Managing Director, Halifax, comments: “UK house prices rose by 1.7% in September, adding more than £4,400 to the value of the average property. This rate of monthly growth was the strongest since February 2007, pushing year-on-year house price inflation up to 7.4%. This also reversed the recent three-month downward trend in annual growth, which had peaked at an annual rate of 9.6% in May. The price of an average house is now as expensive as it has ever been, standing at just over £267,500.
“While the end of the stamp duty holiday in England – and a desire amongst homebuyers to close deals at speed – may have played some part in these figures, it’s important to remember that most mortgages agreed in September would not have completed before the tax break expired. This shows that multiple factors have played a significant role in house price developments during the pandemic.
“The ‘race-for-space’ as people changed their preferences and lifestyle choices undoubtedly had a major impact. Looking at price changes over the past year, prices for flats are up just 6.1%, compared to 8.9% for semi-detached properties and 8.8% for detached. This translates into cash increases for detached properties of nearly £41,000 compared to just £6,640 for flats.
“Against a backdrop of rising pressures on the cost of living and impending increases in taxes, demand might be expected to soften in the months ahead, with some industry measures already indicating lower levels of buyer activity. Nevertheless, low borrowing costs and improving labour market prospects for those already in employment are likely to continue to provide support.
“Perhaps the biggest factor in determining the future of house prices remains the limited supply of available properties. With estate agents reporting a further reduction in the number of houses for sale, this is likely to underpin average prices – though not the recent rate of price growth – into next year.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "Although reflecting some historical buying and selling, the housing market continues to demonstrate remarkable resilience bearing in mind the number of transactions brought forward in the last few months to take advantage of the stamp duty holiday.
"Nevertheless, we are finding activity has lost some oomph but there is still plenty of life left, supported by record-low interest rates and supply, while though rising, is not doing so fast enough. The market also seems to be shrugging off rising inflation and the end of furlough, as well as widening economic concerns."
Anna Clare Harper, CEO of property consultancy SPI Capital, says: "Average house prices rose to £267,587, having grown 7.4% over the last year. Strong monthly growth in September reflects the rush to complete before the temporary stamp duty relief ended.
"There are two important subtleties worth mentioning. Firstly, not all house prices have gone up. Growth has been far greater for houses than flats. The ‘boom’ in prices has been particularly strong for properties suitable for homeowners. Prices have increased in more spacious properties with gardens outside major cities.
"Secondly, while the stamp duty relief helped achieve one government objective by keeping confidence high through the pandemic, it is at odds with another government objective of making housing affordable and accessible for all.
"So what next? Finance remains cheap, and banks are fighting to offer the best rates and terms, even offering mortgages of up to 100% to aspiring homeowners. With so many attractive products available, it’s no surprise that affordability is becoming stretched. Aspiring homeowners must remember that both capital and interest repayments must be repaid.
"Construction is becoming harder and more expensive thanks to logistics issues, rising material costs and a shortage of labour. The UK is unlikely to meet its target of 320,000 new homes per year in this context.
"These two factors mean house prices are expected to continue to grow. However, we expect this growth to slow over the coming months as we settle into the ‘new normal’."
