First published by Mortgage Introducer
The future of a post-stamp duty holiday housing market
If you’re a UK consumer who takes only a passing interest in the housing market then the likelihood is your views on ‘what it is like’ are probably shaped by the media, perhaps specifically the newspapers, you read.
Are the high level of transactions and the levels of demand a sure sign of an overheating marketplace, or actually are we already seeing the future in terms of a normalised post-stamp duty holiday market beginning to emerge?
My feeling is that it’s the latter argument that looks far more credible and as we move forward throughout the year, most notably as we pass this forthcoming June stamp duty holiday deadline and the partial one – which is only a few months away in September – we’ll begin to see this normalisation become ever clearer.
Indeed, there’s already a very strong argument to suggest that’s exactly what we’re starting to see.
After all, anyone coming to the housing market right now and determining that they have a very good chance of getting any sort of stamp duty saving would, at best, be very optimistic and, at worst, somewhat deluded.
I would anticipate that every single property market professional they encounter along the way – whether estate agent, adviser, lender, you name it – is going to be disavowing them of the notion that a stamp duty saving is achievable even before the end of September.
As mentioned, that seems very optimistic given that I’m reading of average offer to completion times of 20 weeks – five months in old money, in case you come across a client who thinks it still might be doable.
Continued demand beyond cost savings
So, if as I suspect, the vast majority of those now coming to market are fully aware their chances of purchasing and saving money on stamp duty are slim to non-existent, that would seem to tell me their motives for buying are not reliant on achieving that saving.
Which seems bizarre to even say or perhaps think, but clearly if there is going to be a tax saving then, as we’ve seen time and time again in the housing market, this does act as an incentive.
The reason I say all this is that we’re still seeing incredibly strong demand in the market.
From our perspective, business volumes have been very good; our surveyors have been very busy which continues to mean we look at ongoing recruitment and adding further resource in order to meet that demand.
However, this ongoing activity points us even more strongly in the direction of a ‘landing’ for the housing market post-stamp duty holiday.
This isn’t a hard crash and is much smoother than some of the more pessimistic commentators might have us believe.
New motivations driving property purchases
The underlying drive of this market – if it ever was – is no longer stamp duty savings simply because it can’t be.
So, what is it? It’s people’s genuine desire to look at other housing options, particularly in a post-lockdown environment where (as we know) many found the stresses and strains of those periods compounded by their living arrangements.
So, whether it’s tenants in the private rental sector or those looking at home ownership, there is a genuine desire to move to other properties which fit the bill far more effectively.
That’s a desire for more space in order to work from home more, as many millions of people look likely to do on a regular basis, or it’s a move away from certain regions or cities or towns, where that type of space is more freely available.
What we can see are people looking at their options to make those moves in still very strong numbers.
The likelihood is that the summer will move at a slightly slower pace, simply because people will want to take holidays – and will have employers urging them to take them – but over the course of the next few months and, beyond the end of September, I see no reason to suspect housing demand will fall off that cliff.
If anything, we’ll see far more motivated buyers and sellers, not thinking about stamp duty in the sense of saving money but understanding that, depending on their circumstances, they will have to pay the ‘going rate’ as it was pre-pandemic.
It’s always going to be a factor, given the cost, but it’s not going to be figuring further up the scale of considerations than it does in ‘normal’ times.
And it therefore seems entirely plausible that talks of any sort of crash are very much exaggerated, plus there is an awful lot of demand to be fulfilled in the coming months, to keep us all very busy for some time to come.
Simon Jackson is managing director at SDL Surveying