Housing market slows down as stamp duty break ends

Nationwide have said that the withdrawal of the stamp duty breaks across the UK have “taken some of the heat out” of the housing market.

Despite house prices being 10.5% higher than they were a year ago, prices have dropped slightly in July when compared with June, according to the mortgage lender.

The tax break has caused a housing boom during the coronavirus crisis as people search for more living space.

However, rising house prices have also outstripped any savings that could have been made on stamp duty.

The building society said that the average house price stood at just over £244,000 in July.

A 17-year high in annual house price increase was measured in June this year, which then slowed slightly the next month.

The stamp duty holiday was withdrawn in Wales by the end of June, just as Northern Ireland and England reduced their thresholds for the tax break. By October, stamp duty will have returned to its pre-pandemic status.

Robert Gardner, chief economist at Nationwide, said: "The tapering of stamp duty relief in England is also likely to have taken some of the heat out of the market.

"This provided a strong incentive to complete house purchases before the end of June, especially for higher-priced properties."

Gardner added that the market for flats had fallen despite sales of larger properties surging.

The number of property transactions over the 12 months to March rose by 2%, however, the number of transactions involving properties worth over £500,000 jumped by 37% in the same time period.

Chief executive of The Guild of Property Professionals, Iain McKenzie, said: "It is going to be interesting to see how the demand for properties changes as we come into the autumn.

"This will give us the opportunity to evaluate just how successful the stamp duty holiday has been at keeping the property market buoyant since the start of the pandemic."

Managing director at estate agent Fine & Country, Nicky Stevenson, said: "While the clamour in recent times has been for bigger properties with more outdoor space, we may see luxury apartments start to come back into vogue as the drift back to the office starts to gather pace in the big cities."