UK housing market cools as stamp duty holidays end | Housing market


Britain’s largest mortgage lender predicted a slowdown in the boom in UK house prices after reporting a drop in the annual property inflation rate.

The Halifax said prices rose 0.4% in July, the first month since buyers in England and Northern Ireland faced a less generous stamp duty holiday.

However, the bank said prices rose more sharply a year ago, so the annual rate of increase fell from 8.7% to 7.4% – its lowest level since March.

The monthly property market update showed a marked north-south divide, with London, the south-east and east of England reporting the smallest annual price increases, while the biggest jumps had place in Wales, the North West and Yorkshire and Humberside. .

House prices have risen sharply over the past year, aided by Chancellor Rishi Sunak’s decision to remove the stamp duty on purchases in England and Northern Ireland up to £ 500,000. The tax break was limited to houses up to £ 250,000 in early July and will drop to £ 125,000 in October. The holidays are already over in Scotland and Wales.

Russell Galley, chief executive of Halifax, said the July increase added more than £ 1,000 to the average house price, taking it to just over £ 261,000, up £ 18,500 from the previous year.

“The past few months have been characterized by historically high volumes of buyer activity, with June being the busiest month for mortgage completions since 2008. This has been fueled by both the ‘space race’ And by the time-limited exemption from stamp duty.

“With the latter now entering its final stages (the zero percent rate only applies to the first £ 250,000 of the purchase price, before reverting to standard rates from October), the business of Buyers are expected to continue to ease over the next few months, and a more stable period for the market may loom on the horizon.

Galley said a shortage of properties for sale and low interest rates will help support prices over the next few months. Annual property price inflation would slow down but remain “well in positive territory” by the end of the year, he added.

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Anna Clare Harper, CEO of real estate consultancy SPI Capital, predicts that house prices will continue to rise faster than most people’s wages, due to cheap loans and limited supply.

“The slight slowdown in annual house price growth is not surprising as the rise in values ​​was directly caused by the policies surrounding the pandemic rather than occurring despite Covid,” Harper said.

“Housing transactions and prices were encouraged by the temporary reduction in stamp duties, which was designed to boost the housing market and confidence during the pandemic, as well as by the increase in staff numbers and a flight to assets. more secure. At the same time, interest rates remain low, which helps explain why house prices are rising much faster than wages: money is cheap and accessible.

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