House prices stall as stamp duty holiday is phased out
UK house prices softened in July, official data showed on Wednesday, as the stamp duty holiday began to be phased out.
According to the Office for National Statistics, average house prices increased 8.0% year-on-year in July. That, however, was down on June’s 13.1% growth.
The average house price was £256,000, £19,000 more than July 2020 but nearly £10,000 less than June 2021.
The stamp duty holiday, which raised the threshold to £500,000, was introduced in July 2020. Combined with pent-up demand following the first lockdown, it caused the property market to boom.
The tax break is now being phased out, however, and the threshold was cut to £250,000 on 1 July. It will revert to its traditional, pre-pandemic level of £125,000 on 1 October.
The ONS noted: "As the tax break was originally due to conclude at the end of March 2021, it is likely that March’s average house prices were slightly inflated as buyers rushed to ensure their purchases were scheduled to compete ahead of this deadline. This effect was then further exaggerated in June 2021.
"Average house prices for July returned to similar levels seen earlier this year. Monthly property transactions statistics, published by HM Customs, show that the seasonally-adjusted number of transactions in July 2021 fell to 73,740 following the record number of 198,420 in June."
Paul Stockwell, chief commercial officer at Gatehouse Bank, said: "House price growth may have stalled in July but that was inevitable after the surge created by the stamp duty deadline. Indications that price growth is unlikely to slow significantly from here are already coming from large parts of the UK.
"While price growth may be less consistent over the remainder of this year, buyers’ desire for more space continues unabated and the improving availability of mortgages requiring smaller deposits is drawing first-time buyers back to the market."
The ONS UK house price index is calculated using data from HM Land Registry, Registers of Scotland, and Land and Property Services Northern Ireland.