Will the end of the stamp duty holiday cause a housing market crash?
PUBLISHED: 06:00 31 October 2020
House buyers are gritting their teeth over the end of the stamp duty holiday which could cost them dear. But what’s it going to do to the Norfolk market?
The housing market is braced for the fall-out from the government’s stamp duty holiday with estate agents saying: “We just can’t get people moved fast enough.”
And many predict the March 31, 2021, deadline is going to bring a definite chill to the market.
One agent predicted a drop in sales next April-June of as much as 25pc and another forecasting zero price growth across the whole of next year.
It is estimated there are currently around 418,000 residential property sales in the pipeline nationwide, up from 280,000 a year ago. But data analysts predict 325,000 buyers will not complete before the deadline.
One boss of 10 estate agents offices across the country described it as “a pipeline of sales bigger than we’ve ever seen before”.
As a result, agents are calling on chancellor Rishi Sunak to grant a six month extension to the stamp duty break. One estate agent leader in Norfolk has urged the government to change the deadline to be at the point of exchange, not completion, to ease the pressure.
It comes as Norfolk is enjoying a busy market as people exit towns and cities in favour of the countryside because of Covid.
And it’s helped boost property prices with figures showing Breckland recorded the highest average house price growth from January to August in Norfolk – equivalent of 6pc and an average of £13,000 extra on the price of a home.
But areas where it might be expected prices would rise – such as north Norfolk – saw hardly any change.
The stamp duty holiday has certainly helped fuel the market, even when some say it wasn’t actually needed. But what will be the impact be when it ends?
Jan Hytch, chairwoman of the Norwich & District Association of Estate Agents, has been lobbying government for change.
“If March 31 was for exchange, not completion, with completion within four months, it would take the pressure off,” she said. “It would allow for chains spread over different Covid tiers or the fact you can’t get a removals firm.
“As for house price rises, we’ve seen maybe a half to one percent rise in Norfolk. There needs to be people buying with a lot more confidence of wealth. It is unique to this year that people are motivated to move because they want to be in a safe place and their job has changed, meaning they are downsizing, getting rid of their mortgage and looking for a more simple, less expensive life nearer to families.
“So the stamp duty holiday is only one factor. It isn’t a deal breaker but I think there will be some people wanting a negotiation on price nearer the time.”
Nick Taylor, managing director of Hadley Taylor in Norwich, said: “Whenever governments manipulate stamp duty in this way there are always consequences and we are sure to see a cooling. House prices will ebb and flow over the next few months and will track the rise and fall of Covid deaths.”
Ben Rivett, associate director, Savills Norwich, said: “For many, the challenge now is getting deals through to completion by Christmas, after which point all eyes will be on beating the March 31 deadline. We are expecting the end of the stamp duty holiday and a projected rise in unemployment to cause the market to slow in the short term, with zero price growth projected for 2021.”
Max Sowerby, managing director of Sowerbys, with 10 offices, said: “Removals firms and conveyancers are struggling, we just can’t get people moved fast enough. We have the biggest pipeline of sales we’ve ever had in our existence, and an extension to the stamp duty holiday would just take the pressure off everything.”
Jamie Minors, managing director of Minors & Brady, with four offices across Norfolk and Waveney, said “I expect a much quieter time come April 2021-June 2021, with expected volumes of sales to drop 25pc. We are in an exceptional bubble of activity, which we may not see again for many years. The government is protecting the housing market, therefore I do not foresee a crash whatsoever, providing lending is available from the banks and rates remain low.”
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