The UK property market has been surprisingly buoyant during the past twelve months. With a potential fall in property prices due to the staggered ending of the stamp duty land tax (SDLT) holiday, which should result in more subdued activity, what will homeowners decide to do?
2020 and 2021 (thus far) has been a somewhat golden period for UK property. Across the country, prices have risen, and there have been extreme levels of activity. It is a far cry from what some experts predicted in the first quarter of 2020; thankfully, not a great deal has been heard from them since. We, however, were one of the global news media outlets that viewed things a little differently.
For some, the rapid rise in property prices has been incredibly positive but this has not been shared across the board. From our perspective, we feel that these price spikes now need to be reined back in and some of the steam needs to be let out of the market. So, a potential fall in prices is not something we view as entirely negative.
Should the current trend in rising prices continue, it will become nigh-impossible for many to get a foothold on the market, which will open doors for some single-minded developers to upscale their plans which could destroy more of the greenbelt the UK is famed for.
Are homeowners worried about the staggered ending of the SDLT holiday?
According to new research by the homebuying platform Yes Homebuyers, they’ve discovered that homeowners don’t seem to be overly concerned.
The term’ potential cliff edge’ has been used by many news outlets to describe the ending of the SDLT holiday and, with it, an expected fall in activity and property values. Despite this, Yes Homebuyers’ research shows that just 14% of homeowners are worried about the value of their property falling when the current stamp duty holiday does expire.
Last week, the latest Halifax House Price Index revealed that house prices had hit record highs in March, up 6.5% when compared to the previous year. It is hardly surprising that 67% of homeowners also stated that they think current house prices are too high, with the average buyer now paying nearly £255,000 to get on the ladder.
However, having done the hard work of saving a deposit and tackling the often lengthy, uncertain and stressful property transaction process, the majority of homeowners understandably want to see their investment retain its value.
Yes Homebuyers found that 68% of homeowners would actually refrain from selling their home in the future if it was worth less than the current market value. This suggests that should the market tumble over the cliff edge come September, a drop in property values could cause the UK property market’s cogs to stop turning.
Yes Homebuyers, Founder Matthew Cooper said, “It’s interesting to see the split personality of homeowners when it comes to property and their feelings towards it both as an aspirational achievement and as an investment asset.
On the one hand, homeowners remain undeterred about any short-term market decline as many have invested in their home with a long-term view. They generally realise the property market is cyclical in nature, so while house prices have gone up, they will inevitably come down, but they’re likely to see an increase in value in the long run.
However, when it comes to selling and actually securing a return on their investment, they’re unlikely to do so at a loss unless they absolutely need to move.
This suggests that while homeowners are generally unphased by a potential cliff edge, we could see market activity dry up should the market topple over it come September.
With the Government artificially fuelling the market to such a heightened level for over a year now, we are undoubtedly going to see a bumpy landing when the stamp duty holiday finally does end. The question is, to what extent will this impact the market?”
The Yes Homebuyers survey involved 1,002 UK homeowners and was carried out on 13th April 2021.