House price rises slowed in July after reaching a 17-year high in June, according to new figures from mortgage lender the Nationwide. However, prices last month were still 10.5% higher than a year ago.
“The tapering of stamp duty relief in England is likely to have taken some of the heat out of the market,” said Robert Gardner, Nationwide’s chief economist. He added that the fall in the threshold for the tax from £500,000 to £250,000, “Provided a strong incentive to complete house purchases before the end of June, especially for higher-priced properties.”
But the report reveals that the stamp duty holiday wasn’t the only factor in boosting sales during the pandemic. Of homeowners considering a move, who were surveyed by the Nationwide at the end of April, three quarters said this would have still been the case if the holiday had not been extended beyond its original March deadline.
Says Mr Gardner,
“Shifting housing preferences appear to have been the more important factor in driving the increase in housing market activity, with people reassessing their housing needs in the wake of the pandemic.”
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And while buyers rushed to complete before the deadline, the benefits were cancelled out by price rises in many cases. According to Mr Gardener:
“The ‘savings’ from the stamp duty holiday have been dwarfed by the impact of recent house price gains. For a £500,000 property that saw the same average increase as the typical property over the same period, the comparable house price increase was c£57,000 against a stamp duty saving of £15,000.”
Higher priced properties have driven increased activity since the beginning of the pandemic, says the report, with transactions involving homes costing £500,000 or more up by 37% over the year to March 2021. There has also been a big shift in sales of larger homes, consistent with changing priorities and a search for space as a result of lockdown.
Read more about this report on the Nationwide website.
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