You are here: Home - Mortgages - Buy To Let -

House prices dip in July as activity wanes following stamp duty taper

Written by: Emma Lunn
Average house prices declined 0.5% to £244,229 from June to July, latest figures from Nationwide showed.

This was a change from the 0.7% monthly growth recorded in June, according to the Nationwide house price index. 

Annual price growth remained in the double figures at 10.5%, but this was down from a yearly increase of 13.4% the month before. 

Stamp duty holiday not a major motivator 

While transactions in June reached a record high of nearly 200,000 due to the end of the first phase of the stamp duty holiday, this was not the main driver for purchase activity, Nationwide said.

A survey conducted by the mutual found a quarter of homeowners were either in the process of moving or considering it because of the pandemic. Three-quarters of those said they would have done so even without the stamp duty holiday extension. 

Robert Gardner, chief economist at Nationwide, said demand would remain solid in the near term. 

“Consumer confidence has rebounded in recent months while borrowing costs remain low. This, combined with a lack of supply on the market, suggests continued support for house prices. But, as we look toward the end of the year, the outlook is harder to foresee.  

“Activity will almost inevitably soften for a period after the stamp duty holiday expires at the end of September, given the incentive for people to bring forward their purchases to avoid the additional tax,” he said.  

Gardner added: “Nevertheless, underlying demand is likely to soften around the turn of the year if unemployment rises, as most analysts expect, as government support schemes wind down.  

“But even this is far from assured. Even if the labour market does weaken, there is also scope for shifts in housing preferences as a result of the pandemic to continue to support activity for some time yet.” 

Price crash avoided

Property prices declining in June was a sign of the market cooling off after six months of frenetic activity, industry figures said. 

However, a lack of housing stock and first-time buyers coming back into the market will sustain demand and prevent significant drops in house prices. 

Robert Payne, co-founder of Langley House Mortgages, said: “The first half of July was noticeably quieter, but this happens every year as families prepare for the schools to break up, and then you had the Euros on top.  

“The level of enquiries we’ve been getting has actually increased significantly since then, predominantly among first-time buyers who are finally getting a look in now that the competition has reduced.” 

Imran Hussain, director of Harmony Financial Services, added: “The market in July was as busy as ever and with the unprecedented lack of stock, don’t expect prices to fall.  

“I can’t see price growth continuing at its recent rate in the second half of the year due to the first phase of the stamp duty holiday ending, but the sheer number of first-time buyers will keep prices ticking along comfortably.” 

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week