House prices fall as sellers hope to beat tax deadline
Average property prices fell by nearly £3,000 this month (-0.9 per cent) as sellers tried to temp buyers to squeeze in a sale before the end of the stamp duty holiday.
Despite their efforts sellers are unlikely to beat the stamp duty deadline, according to Rightmove, as it typically takes more than four months to complete a purchase.
The keep the housing market buoyed during the pandemic the government announced a temporary reduction in stamp duty on residential purchases until 31 March 2021. Until then buyers will only start paying stamp duty on the amount paid above £500,000.
Buyer activity has continued to exceed the same period last year, even though the beginning of 2020 also had a very active start, buoyed by the post-election ‘Boris bounce’.
The number of prospective buyers contacting agents between 2 and 12 January was up by 12 per cent and sales agreed numbers up by 9 per cent on the comparable period last year.
Visits to Rightmove have continued to increase since the start of January, and are up by 33 per cent on the same period in 2020.
Rightmove director of property data Tim Bannister said the end of the stamp duty holiday combined with the challenges brought about by the pandemic was influencing behavior and clouding the 2021 outlook, but the market looked robust.
“Rightmove’s early January market-leading indicators of buyer demand and the number of actual sales being agreed are looking robust, showing that there are many compelling reasons other than the stamp duty savings to make buyers enter the market in 2021,” he added.
613,000 sales in the pipeline
Analysis from Rightmove found it is taking 126 days from the time an offer is accepted until legal completion – just over four months.
Of those in the sales agreed pipeline, now at 613,000, Rightmove has projected some 100,000 will miss out on stamp duty savings.
Bannister added: “While the tax savings were an added incentive, movers’ desire for more inside and outside space seems to be continuing, and this new lockdown could be a spur to act in 2021 for those who can and who did not do so in 2020.
“However, there are still a huge number of sales agreed in 2020 that are stuck in the processing logjam and awaiting legal completion.”
He said the challenge of processing so many transactions in less than three months would be made even tougher by lockdown restrictions, Covid-19 sickness and homeschooling, which would reduce the capacity in conveyancing, legal searches and mortgage lending.