Housing market dip forecast as end of stamp duty holiday nears
- Credit: SARAH LUCY BROWN
A Suffolk estate agent predicts a "lull in activity" on the housing market this year after a property boom in 2020.
Tom Orford, who leads the residential team at Savills Ipswich, said rising unemployment and the end of the stamp duty holiday on March 31 would lead to fewer sales — but said it should not damage house prices.
“Against all expectations 2020 was an incredibly busy year and that momentum has continued into the early part of 2021," he said.
"The end of the stamp duty on March 31 is also creating some degree of urgency as buyers try to complete sales ahead of that date – particularly in the middle part of the market where upsizers have the most to gain.
"With the current lockdown causing further economic disruption and making it more difficult for some buyers to complete there’s arguably a stronger case for extending or tapering its withdrawal.
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"But for now March 31 remains the deadline and buyers and sellers should proceed accordingly.
“As such we are anticipating a lull in activity for the middle part of the year, particularly as that’s when unemployment is also expected to peak.
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"However the extent of any house price falls are likely to be tempered by an effective vaccination programme and rising consumer confidence.
"Levels of activity are also expected to be sustained at the top end of the market by those with secure household finances."
This came as another index reported that in January annual house price growth slowed for the first time in six months as the end of the stamp duty holiday approaches.
According to Nationwide Building Society, house prices were up by 6.4% annually in January, marking a slower increase than the 7.3% uplift recorded in December.
Robert Gardner, Nationwide’s chief economist, said: “To a large extent, the slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.
“While the stamp duty holiday is not due to expire until the end of March, activity would be expected to weaken well before that, given that the purchase process typically takes several months.
“The typical relationship between the housing market and broader economic trends has broken down over the past nine months.”