Inflated house prices wipe out stamp duty holiday savings across every UK region

Every region in the UK has experienced a rise in average sold property prices irrespective of the 'saving' made from the stamp duty holiday, according to new research from MIAC Property Analytics.

Related topics:  Finance News
Rozi Jones
1st July 2021
house on a map
"One of the unintended consequences of the stamp duty holiday has been a gold rush to complete before the respective deadlines, with the unprecedented demand pushing up prices in return."

The firm analysed sold house prices in June 2020, the last month before the stamp duty holiday was introduced, comparing them against the latest data from April 2021 for house sales in real terms.

By county, buyers in a number of areas experienced a saving after the stamp duty holiday was considered; overall, however, the temporary tax relief was outweighed by price inflation across the entire nation.

The North West saw house prices rise the most sharply between June 2020 and April 2021, with an overall increase of 3.68% in real terms despite an average stamp duty saving of £1,849. Yorkshire and the Humber was the second biggest loser, with a home costing on average 3.26% more in April 2021.

Although every region in England experienced a price increase in spite of the stamp duty saving, some fared better than others.

Buyers in Hammersmith and Fulham made the greatest saving, with a stamp duty reduction of £14,680 allowing buyers to save £8,272 despite the average price rising from £784,460 in June 2020 to £790,867 in April 2021.

In contrast, buyers in Westminster experienced the biggest price hike, paying a whopping £138,316 more on average in April 2021 than June 2020, even when allowing for the stamp duty saving. The average terraced house in Westminster sold for £3,994,547 in April 2021 – an eye-watering £243,911 more than ten months prior despite buyers saving £15,000 on stamp duty.

A detached home in Newport, Wales cost almost £60,000 more after the tax break, making it the area with the biggest price increase outside of London.

Rutland in the East Midlands saw the biggest real-term house price increase outside of London with people paying on average £39,364 more in June 2021 despite a £9,899 saving in stamp duty.

Savings were few and far between but there were still some bargains to be had. Aberdeen, Scotland, for example, was the only place in the UK where buyers made a saving on semi-detached houses, by an average of £755.

MIAC Analytics’ managing director, Darrel Welch, commented: “The stamp duty holiday was an initiative designed to reboot a property market that had effectively stagnated as the pandemic and lockdown measures delayed completions and made house viewings virtually impossible. One of the unintended consequences of the stamp duty holiday has been a gold rush to complete before the respective deadlines, with the unprecedented demand pushing up prices in return.

“What this data shows is that a significant amount of the stamp duty saving made over the last year has simply been added onto the cost of the sale, in some cases adding tens of thousands of pounds on to a mortgage. This data provides a snapshot of the holiday’s impact in real time, but it will be at least six to twelve months down the line until we can understand the true impact. If house prices snap back to pre-pandemic trends, then thousands of people could be at risk of over-sized mortgages and negative equity.”

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