The average price of all completed house sales (both mortgages and cash) grew at an annual rate of 3.6% in September, according to the latest data from e.surv.
This is just 0.2% lower than the rate of 3.8% recorded in August, but is a reduction of 5.1% from the 8.7% growth in prices seen in June.
The slowing in price growth since June almost certainly relates to the ending of the first stage of the Stamp Duty holiday in England, along with the complete withdrawal of the Land Transaction tax holiday in Wales.
The influence of the SDLT tax holiday on England’s housing market is possibly best demonstrated by considering the number of transactions that took place over the period from June to August 2021. In June 2021, HMRC estimated that 190,760 residential sales took place in England and 8,060 in Wales. These levels of sales are double those usual in an average month. The much-reduced figures for July and August were 64,980 and 87,860 in England and 4,560 and 5,080 in Wales.
This pattern of sales volumes is often seen in the period surrounding the termination of such temporary tax holidays. In those situations, there is typically a spike in sales as the tax holiday deadline draws to its close, followed by a month - or two - when sales fall below their usual levels due to purchases having been brought forward into earlier months to take advantage of the tax savings, with transaction levels thereafter often returning to their more normal levels.
Richard Sexton, director at e.surv, comments:
“House price growth is clearly in retreat in headline terms but there is little evidence of prices stagnating or falling. Indeed, regionally, there are substantial pockets of resistance to overall falls in house price growth."
“Our data shows that while some regions like the North East of England suffered their largest fall in the annual rate of growth (down by 6.3%) over the month, other areas like Wales fared much better. Indeed, Wales comfortably out-performed the rest of the country - having the smallest fall in price growth from 12.2% down to 11.2%. The Land Transaction Tax holiday came to an end at the end of June – but the tax savings available in Wales were not as large as in England (£2,450 in Wales vs £15,000 in England). This is we think a key reason potentially why the fall in prices in Wales has not been as significant as in England over the past few months. Wales therefore stands out as having the highest annual rate of price growth at 11.2%."
“In terms of property types, it’s worth noting too that, while the pandemic drove a race for space the price of flats in September staged a small recovery with the largest gains in flat prices being seen in Prime Central London and in Hammersmith and Fulham."
“On September’s data, there is little evidence that home buyers are being spooked by the end of the furlough scheme. Data from government points to a resilient job market that will further underpin buyer and lender confidence.”