Post Stamp Duty Holiday: What next for the property market?
As the end of the Stamp Duty holiday approaches, Alex Davies reports on what’s next for the housing market in Kent and East Sussex?
I would argue that homes were already selling like wildfire before Rishi had his light bulb moment and the statistics bear this out. Was his stamp duty holiday pouring fuel on the fire?
When Rishi Sunak announced a temporary Stamp Duty holiday on July 8th 2020 to counter the effects of the Pandemic, homebuyers celebrated the chance to save on buying costs.
Was he right to do it?
Commentators applauded the wisdom of encouraging house buying as an economic multiplier and few disagreed that a stimulus was required.
The initial deadline of 31st March 2021 for those seeking the full saving up to £500,000 caused a huge bottleneck of sale transactions. And the extension to the end of June only kicked the can down the road
The remainder of the incentive finally expires at the end of September 2021 on purchases up to £250,000 but, in practice, the chance to get a transaction through by this date has long expired.
So was the Stamp Duty holiday necessary?
I would argue that homes were already selling like wildfire before Rishi had his light bulb moment and the statistics bear this out. Was it pouring fuel on the fire.
Rightly or wrongly, Estate Agents were allowed to operate for much of Lockdowns 1 and 2 and pent up demand for property was unleashed from buyers who’d spent too long locked down.
Pent up demand quickly turned into a social revolution called working from home. I’ve lost count of how many buyers have told me that their working lives have changed forever and they can now live wherever they like.
Tearing off the shackles of daily commuting
So WFH has unleashed yet more demand tearing off the shackles of daily commuting and geographically changing the places people choose to live.
And the places people choose to live depends on where they lived before. A house with a small garden or a flat with no garden, urban living swapped for country living and the seaside beckons too.
No more commuting from suburbia and no more driving each day to the M25 simply cross the landing to the 3rd bedroom and the working day bursts into life at the push of a keyboard button.
So the Stamp Duty holiday was probably not necessary with hindsight and it probably wasn’t right to interfere with a free property market.
Winners and losers
The market is driven by a simple supply and demand equation and there will always be winners and losers. Artificial stimulus in any market must come to an end and when it does the effects can be catastrophic.
Not this time, the WFH revolution continues to provide the stimulus and a critically undersupplied property market could take a long time to balance out.
Historically low mortgage rates prevail and miserably low savings rates continue to drive property investment as a safe haven.
The doom and gloom mongers may have to wait a while as I predict property prices will continue to grow despite the ever-increasing cost of living.
So farewell to the Stamp Duty holiday and congratulations to all of those who saved on their buying costs but the property market was booming without it.
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In a bid to boost the housing market after the effects of the pandemic, the Chancellor announced a temporary Stamp Duty holiday on July 8th, 2020 – increasing the 0% tax rate up to £500,000 for first time buyers, home-movers and those purchasing an additional property, providing savings of up to £15,000.14 Apr 2021
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