New reports are further painting the picture of the strong activity being seen in the UK property market. But will the sector rebalance after the stamp duty holiday ends? With property demand and sales at high levels, the UK property market had another record-breaking month. At the same time, supply has remained low in recent months, which has put upwards pressure on house prices.
The stamp duty holiday and the ‘race for space’ has driven UK property market activity. This has also put increasing pressure on professionals in the industry, such as conveyancers, lenders and estate agents.
Property sales and prices
According to a housing report by Propertymark, one in three properties, or 33%, sold for more than the original asking price in May. This is the highest ever on record for the second month in a row. In April, 32% of the properties sold for more than the asking price.
The average number of sales agreed per estate agent branch was 12 in May. It was at this same figure in April. Year-on-year, the figure for May is the highest for this month in 17 years.
Mark Hayward, chief policy advisor of Propertymark, states: “It is incredible to see demand for housing continuing to break records and more homes selling for over the asking price than ever as consumers rush to beat the initial stamp duty deadline at the end of the month.”
Supply of houses on the market
Supply is still at particularly low levels with an average of 20 buyers chasing each property. The number of properties available per member branch fell from 27 to 25 between April and May. This is the lowest figure since December 2002.
On the other hand, buyer demand has remained high. There were 506 house hunters registered per branch in May and is the highest figure on record for May. And it’s an increase from 427 in April.
A rebalancing market
The stamp duty holiday deadline for properties valued at £500,000 or below ends on 30th June. Thousands of buyers and sellers aren’t expected to complete by the deadline. The tax holiday will be cut back to properties valued at £250,000 or below from 1st July to 30th September.
Price negotiations have been underway between buyers and sellers who will miss the stamp duty deadline on Wednesday, according to Knight Frank. The maximum savings drops from £15,000 to £2,500 from 1st July.
The UK property market is already starting to show signs of slowing down. There has been a steady slowdown in overall new enquiries to estate agents in the UK, according to the Yomdel Property Sentiment Tracker.
Property market activity is remaining at elevated levels. However, a rebalancing has happened as the first deadline for the stamp duty holiday has neared. During the week ending 20th June, new vendor enquiries dropped 7%, while new buyer enquiries fell 2%. These are 28% and 25% below 2020 figures respectively and 18% and 27% above the pre-COVID 62-week average.
In the coming months, a further rebalancing is expected. Mark Hayward comments: “With 20 buyers per available property, we are firmly still very much in a strong sellers’ market; properties are being snapped up swiftly and at record high prices.
“However, we anticipate that there will be a much needed rebalancing over the coming months as the remaining stamp duty deadline phases out and people start returning to a semblance of normality, spending money they have been able to save during the pandemic on holidays and more normal activities such as spending to see friends and family.”