In the last two months a rebound in the UK’s housing market could be seen. The house prices saw positive growth for the first time since the country went into lockdown in March. And all the credit to the changes made in the United Kingdom’s Stamp Duty Land Tax (SDLT) rules. The news being welcomed with warm hands there are rising doubts that, if, the rules where here to stay. The enquiries have been raising strongly since July, mortgage applications have doubled since the market re-opened in May as suggested by the Data from online real-estate portal Rightmove. These demands have helped support prices, with Halifax reporting that prices gained 1.6 percent month-on-month in July, marking the first monthly increase since February and the biggest price rise since last December. And in August, Halifax noted that house prices rose by a further 1.6 percent and also 5.2 percent more than a year earlier, the fastest annual rate since 2016. According to a residential survey from the Royal Institution of Chartered Surveyors (RICS), moreover, a net balance of 12 percent of respondents reported an increase in house prices during July, as house prices rose in virtually every region of the country, contrasting a net balance of minus 13 per cent of the previous month’s survey.
The resurgence was due to the prominent changes in the Stamp Duty rules introduced in July by the government, with Chancellor of the Exchequer Rishi Sunak exempting all residential properties with a value of up to £500,000 from the tax until the end of March 2021, meaning that a homebuyer spending £500,000 on a property could save as much as £15,000 on their purchase. This changes were applied to England and Northern Ireland, similar changes have also taken effect in Wales and Scotland, with the tax-free threshold increased to £250,000.
“The housing market was essentially brought to a standstill from late-March through to mid-May by the lockdown and it does appear to have been an immediate pick-up in housing market activity following the easing of restrictions”, noted Howard Archer, chief economic advisor at professional services firm Ernst & Young (EY).
38 percent more people across the country registering to buy than the same period in 2019 was seen according to the reports of the estate agent Hamptons International in the month of July. This was said to be possible after the announcement of the stamp duty holiday. And Rightmove has observed that the month experienced the highest value of sales in more than a decade, at £37 billion, with prices rising at their fastest annual rate since the months following the 2016 Brexit referendum. Halifax Bank’s managing director, Russell Galley, cites the stamp duty measure as being crucial in boosting confidence among homebuyers and hailing the future as “brighter than expected”. The rejuvenation certainly is good for the UK’s housing market but that should show a sustained resilience to prevent a strong downward market correction. After 11 years , UK is facing recession with the economy having experienced two straight quarters of negative growth. At the beginning of July when Nationwide Building Society reported that UK house prices had registered their first annual decline since December 2012, with prices in June 0.1 percent lower than they were during the same month a year ago, the concerns started raising. “It is interesting that there remains rather more caution about the medium-term outlook with the macro environment, job losses and the ending or tapering of government support measures for the sector expected to take their toll,” RICS chief economist, Simon Rubinsohn, stated. Going forward, policymakers must ensure that young peoples’ incomes are protected in the wake of the coronavirus crisis and that their competitive advantage as first-time buyers is maintained when the stamp duty holiday comes to an end.