Around 100,000 agreed sales will miss stamp duty deadline
The current four month timescale to complete a purchase means new buyers are now unlikely to meet the deadline, according to the Rightmove house price index for January.
Some 613,000 homes have been sold subject to contract but are still waiting legal completion and the firm suggested sellers needed to be flexible with pricing to prevent sales from falling through for those who were hoping to make a saving.
A 0.9% drop in asking prices to £317,058 over the month indicated this was already happening.
Overall, the number of sales agreed was up 9% annually.
Tim Bannister, director of property data at Rightmove, said: “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, with many hoping to beat the impending tax deadline.”
Bannister added: “For those who fail to do so, there may be difficulties if they have factored the tax savings into their budget calculations.
“The challenge of processing so many transactions in less than three months is made even tougher by the new lockdown restrictions, Covid-19 sickness and homeschooling further reducing capacity in conveyancing, legal searches and mortgage lending.”
Ben Taylor, CEO of real estate company Keller Williams UK, said the impeding removal of the tax break was forcing prices to return to normal following months of record increases.
“This latest reduction in asking prices has essentially signalled the end of the homebuyer hysteria spurred by the stamp duty holiday.
“Previously, sellers have chanced their arm with higher price expectations in the knowledge that buyers have that little bit more in their purse to negotiate with,” he said.
Taylor added: “With many now realising that the chances of completing before the March deadline are slim, this is no longer the case and we’re seeing a gradual return to normality where both seller expectation and homebuyer budgets are concerned.”
Marc von Grundherr, director of estate agency Benham and Reeves, said the decline in prices did not suggest there would be a slowdown in market activity and predicted it would remain strong after the stamp duty holiday ended.
He said: “A marginal decline in asking price will no doubt be jumped upon by those sporting their tin hats as signs of the imminent demise of the housing market.
“However, those actually in the trenches will tell you that this is far from the case. Enquiry levels remain robust, properties continue to be snapped up at an alarming rate and the housing market fuel tank is brimming.
“If you believe this current rate of market momentum is going to evaporate overnight come 31 March, you’re going to be sorely disappointed.”