Outlook for the Housing Market
Outlook until the end of Quarter 2 in June 2021
The Chancellor’s announcement of a stamp duty holiday tapered extension means that hundreds of thousands more buyers will benefit from some level of stamp duty reprieve.
Allowing four months for completions after agreeing sale means that most buyers now will be looking to benefit from the stamp duty holiday on the first £250,000 of their purchase, by completing by the end of September, rather than the first £500,000 which means a completion by the end of June.
Buyers in the North are in pole position to benefit from the tapered extension, with more than two-thirds of homes currently listed for sale at under £250,000 – attracting no stamp duty at all. As such, we expect continued upwards pressure on pricing in the North as demand, which we had expected to be sustained even if the stamp duty holiday ended, is now further encouraged by the continued savings on offer.
The data signals that the ‘reassessment of home’ among existing homeowners is set to continue, resulting in a search for space – inside or out, or looking to live in a different location. As lockdowns start to ease, and COVID-19 cases recede, we are set to see more supply come to the market as sellers feel more comfortable inviting potential buyers into their home. This in turn will lead to more activity in the market. This could put increased pressure on the sales completion process, something buyers will bear in mind as we move through the summer.
All of these factors will support activity levels and headline house price growth up to the end of June 2021. While the prospects for the housing market over the year ahead have improved on the back of the Budget, the pathway out of the lockdown, and the route to a full re-opening of the economy and unwinding of support measures, is unlikely to be simple or smooth. We still expect house price growth to moderate later in the year, but overall transactions look set to get an additional boost from the stamp duty measures.