The latest data from the ONS suggests that the end of the stamp duty holiday has done little to deter movers in the space race.

In England, September data shows, on average, house prices have risen 2.9% since August 2021. The annual price hike of 11.5% brings the average property value to £ 287,895.

Regional data for England indicate that:

  • the North-West experienced the largest monthly increase with a movement of 5.3%
  • London saw the weakest monthly price growth, falling -2.9%
  • the Northwest experienced the largest annual price increase, up 16.8%
  • London saw the weakest annual price growth, rising 2.8%

Tom Bill, UK Residential Research Manager at Knight Frank, said: “The housing market has largely ignored the end of the stamp duty holiday and price growth apparently continues to defy economic gravity. Higher-than-normal demand was driven by frustrated buyers who couldn’t make it through the stamp duty holidays and others who waited for calmer conditions after it closed. Below-normal supply will not pick up significantly until next spring, given the seasonality of the UK housing market. This supply / demand imbalance will support prices in the meantime.

“Ultra low borrowing costs also supported demand. In the longer term, it will be necessary to readjust as mortgage rates normalize, a process that has been delayed by the pandemic. Interest rates were 0.75% at the start of 2020 before Covid hit and we don’t expect a significant impact on prices or demand as long as they stay below that level. However, what is different by the start of 2020 is the higher cost of living, which may cause demand to begin to unravel depending on the elasticity of the definition of “transient” by. in relation to inflation. “

“Over 3.5 million first-time home mortgage loans have been issued since the base rate fell to 0.5% in March 2009. This is a large group of homeowners who don’t know what that is when interest payments increase significantly.

UK house prices rose 11.8% through September 2021, up from 10.2% in August 2021. On an unadjusted seasonal basis, average UK house prices increased 2.5% between August and September 2021, compared to an increase of 1.1% during the same period a year earlier (August and September 2020).

The Statistics of real estate transactions in the United Kingdom showed that in September 2021, on a seasonally adjusted basis, the estimated number of residential property transactions valued at £ 40,000 or more was 160,950. This is 68.4% more than there was a year. Between August and September 2021, UK transactions increased 67.5% on a seasonally adjusted basis, following a record high number of transactions in June 2021, and the subsequent reduction in July.

House price growth was strongest in the North West, where prices rose 16.8% until September 2021. The weakest annual growth was recorded in London, where prices increased 2.8% until September 2021.

Karen Noye, Mortgage Expert at Quilter, said: “The end of the full stamp duty holiday was initially hailed as the time when we would start to see the astronomical rise in house prices start to slow, but on a unadjusted average. UK house prices rose 2.5% between August and September 2021, compared to an increase of 1.1% in the same period a year earlier.

“Clearly, other factors are at work in the market and government intervention during the pandemic is not the only force driving prices up. While September was the last month for people to take advantage of the declining stamp duty holiday, demand continues to be strong even after the complete cancellation of the stamp duty holiday. The race for space is helping areas previously deemed too far from city centers to become desirable, as the rise of hybrid work makes longer journeys more acceptable to many. Statistics on UK property transactions showed that in September 2021, the estimated number of residential property transactions was 68.4% higher than a year ago.

“However, today’s headlines about rising inflation could take our breath away during this intense period of house price growth. Raising interest rates to fight rising inflation has been hotly touted for weeks, and many have been surprised that rates haven’t already risen. It is now inevitable that rates will rise in the near future, and when they do, people might start to think twice before raising the sticks. Those with on-trail mortgages may be shocked as they will see their monthly payments increase and, while rate hikes will remain modest in the short term, that may be enough to fend off a slew of homebuyers who are already pushing their limits financially. due to the increase in real estate prices.

“Rising interest rates and their impact on mortgages have the potential to slow the booming real estate market. But with insufficient supply and persistently high demand levels, this is likely to be a slowdown in property price growth rather than a sharp drop. “

Jeremy Leaf, North London real estate agent and former residential chairman of RICS, added: “On the one hand, the ONS real estate index is the most comprehensive of all surveys, but on the other hand it is dated. a little. Nonetheless, it provides an excellent overview of real estate market activity at the time, as most buyers struggled to take advantage of the stamp duty reductions.

“Since then, the market has calmed down and price growth has moderated as so many people have made evolutionary decisions. The outlook remains bright, however, as buyers and sellers defy concerns about rapidly spiking inflation and rising interest rates. “

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