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Stamp Duty Holiday has overstayed its welcome says top agency

Average house prices have risen by £29,000 over the course of the stamp duty holiday as house price annual inflation hits 13.4 per cent.

The percentage figure is the biggest since the end of 2004 with the average home now priced at £245,432, according to Nationwide's index. 

Nationwide's chief economist, Robert Gardner, says it’s almost inevitable that the market would soften for a while after the stamp duty holiday finally expires at the end of September. 

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However, the outlook towards the end of the year is harder to foresee.

He says: “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.”

Not all agencies have responded positively to the huge annual increase.

Tom Bill, head of UK residential research at Knight Frank, comments: “The figures are further proof that the stamp duty holiday has, thankfully, over-stayed its welcome. It was the right thing to do at the height of the pandemic but the extended holiday has distorted patterns of activity and prices in the property market this year.  

“House prices were driven higher by a supply squeeze as the UK came out of the pandemic, an effect seen in other sectors of the economy. If you add in a stamp duty holiday and the fact pent-up demand has been building for years against the uncertain backdrop of Brexit, the result has been a burst of house price inflation.

“We expect UK house price growth to slow down after the summer, declining to mid-single digits by the end of 2021 as more supply comes through. The winding down of the stamp duty holiday and return to a sense of normality will encourage more sellers to list their property and greater balance to return. 

“Owners who have been unable to find purchase options of their own in recent months should return to the market as the shelves are restocked.”

Meanwhile the former RICS residential faculty chief and London agency owner Jeremy Leaf says: “These comprehensive figures mirror activity on the ground in response to the previous likely withdrawal of the stamp duty concession, followed by the extension to the end of June; in other words, peak activity previously prolonged until the end of the month. 

“On the ground, we know that many of the buyers agreeing sales  were not able to take advantage  so there is still plenty of life remaining in the market, even though demand has moderated after the frenzy of the previous few months.”

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