June 2021 became the busiest month since records began, thanks to frenzied activity in the housing market before the changes to the stamp duty rules came into effect.
The number of homes changing hands in the UK soared to the highest level on record in June as 213,120 sales were registered with HMRC. The whirlwind of activity in England, Wales and Northern Ireland created the busiest month since figures were first published in April 2005, during the housing boom that preceded the financial crisis.
The housing market was already gaining strength after the first lockdown ended when the stamp duty holidays were introduced across the UK. Although the threshold was altered to £250,000 in Scotland and Wales, the tax was scrapped on the first £500,000 of a purchase in England and Northern Ireland.
Buyers, except in Scotland, had until the end of June to benefit from the full break, thanks to an extension from the original deadline of 31 March. The tax concession will be phased out entirely at the end of September.
Mortgage rates at record lows
Paul Stockwell, chief commercial officer at Gatehouse Bank, commented that June’s record was likely to stand for some time as it reflected ‘a perfect storm of demand, driven by locked-down buyers seeking more space, combined with the introduction of significant tax savings’. Yet commentators say they do not expect the market to slow down completely.
There still appear to be buyers wanting to move to more spacious homes and mortgage rates are at record lows, as the Nationwide, the UK’s largest building society, this week launched the first sub-1% five-year fixed-rate deal.
Iain McKenzie, CEO of the Guild of Property Professionals, said much of last month’s rise was due to the last-minute scramble to make the most of the stamp duty holiday. However, the holiday has not fully wound down yet and there could still be a boom in areas where housing is priced below £250,000.
McKenzie added that because demand for houses still exceeds supply by a huge margin, his estate agency members have some of the fewest properties available per branch in living memory. And there is no sign of price rises slowing down any time soon, due to such a scarcity of housing stock and the ongoing lower level of stamp duty holiday.
Sales boom at top of property market
The housing boom also benefitted the top of the property market as buyers purchased more £5m-plus homes in London in the first half of the year than they have since 2014. Data from Savills estate agency show that 237 sales worth more than £5m were recorded in the first six months of 2021, 59pc more than the first half of 2020 when sales were depressed by the first lockdown, and 61pc higher than the same period in 2019.
The total value of the sales was £2.3bn, 41pc higher than the first half of 2020, and the highest number and value of transactions since the stampede to beat previous stamp duty chnges in 2014.
Savills said domestic buyers and international house hunters living in London drove the sales, as many searched for larger homes and gardens after a period of Covid-enforced confinement. Activity was concentrated in the £5-10m price range, with 179 transactions recorded, 72pc more than the 104 sales in 2020.
Sales above £10m were more or less comparable to the first half of 2019. Homes of this value are often bought by overseas buyers, who may have been unable to travel to the UK.
Frances Clacy, a Savills residential research analyst, said the absence of overseas buyers had delayed the recovery of parts of the prime London market, most notably the highest value central postcodes, where prices remain around 20pc below the peak.
Houses are still the top performers as buyers seek to upsize, she said, but the market in flats continues to lag behind because of international travel restrictions. However, pent-up demand from those unable to travel suggests demand will be rebalanced once international buyers are able to visit London again.