UK house prices increased by 8.6 per cent in the year to February 2021, according to the latest statistics released by the Revenue and the Office for National Statistics.
The UK Property Transactions Statistics showed that in February 2021, on a seasonally adjusted basis, the estimated number of transactions of residential properties with a value of £40,000 or greater was 147,050. This is 48.5 per cent higher than a year ago. Between January 2021 and February 2021, UK transactions increased by 23 per cent on a seasonally adjusted basis.
The data also showed that there were 180,690 UK housing sales in March, the highest monthly sum since the Revenue started publishing monthly transactional data in 2005.
Nick Whitten, head UK living research at JLL, said that the increased numbers were a result of people trying to sell in advance of the stamp duty deadline, which has since been extended. Whitten added: “It is becoming increasingly clear that the UK housing market is set for a busy and buoyant 2021. JLL calculations show there could be an extra £65bn spent on UK home purchases in 2021 compared with 2020 with at least 200,000 more sales than last year.”
Whitten said that the surge bolstered the case for the abolition of stamp duty. He said: “The rush to take advantage of the Stamp Duty holiday shows that it is a hugely inefficient tax which is ultimately a potential hindrance to the future of economic prosperity of the UK. It makes no sense for people to find themselves ‘locked-in’ to their current home because of the tax burden of moving. People need to be able to migrate towards opportunities as easily as possible in the 4th Industrial Age and as part of the levelling up agenda.”
Other industry voices were bullish, talking about the strength of the property market. Jeremy Leaf, former residential chairman of RICS, said: “Despite strong growth in house prices already, we are confident that there is enough demand to ensure there will not be a price correction, despite the tapering of the stamp duty holiday from the end of June. Our view is reinforced by the rollout of the vaccine and easing of lockdown restrictions which is boosting confidence in the economy and easing fears of a spike in unemployment when the furlough scheme is due to close on 30 September.”
Dave Harris, CEO of more2life, struck a similar chord, saying that the figure demonstrated the resilience of the UK housing market. He pointed out that older borrowers may have taken advantage of the suspension of Stamp Duty to downsize, saying that his company had seen the proportion of over-55s using equity release to have jumped from five per cent to 15 per cent in recent months.
He added: “We expect this trend to continue in the months running up to the end of the holiday and encourage equity release lenders and advisers to work together when processing cases in order to meet growing consumer demand as efficiently as possible.”
Kevin Roberts, director of Legal & General Mortgage Club said the current situation offered opportunities for sustainable development. He said: “it is important that the whole industry works together and with policymakers, to ensure this growth is sustainable. By this, we mean supply must be boosted to keep pace with demand, ensuring the prospect of homeownership is an affordable reality for all; and also that these new homes are designed and built in ways that supports our country’s net zero emissions targets. Creating sustainable homes, at scale, is the key to a successful future for the UK housing market and delivering that is an ambition we in the industry, as well as Government, policymakers and regulators, must all share.”
Others were more sanguine, saying that while the current situation favoured many who wished to downsize, attention must be paid to those looking to get onto the property ladder. Rob Barnard, director of intermediaries at Masthaven Bank, said: “It’s important though that the industry doesn’t leave behind the many would-be borrowers still reeling from the financial effects of lockdown and struggling to secure mainstream finance. As lockdown restrictions ease further, those who are self-employed or who have taken mortgage payment holidays cannot be left in the lurch.”