House price growth eases as stamp duty holiday ends
By Michele Maatouk
Date: Wednesday 28 Jul 2021
(Sharecast News) - House price growth eased slightly in July as the stamp duty holiday came to an end, according to a survey released on Wednesday by Nationwide.
House prices rose 10.5% on the year, down from June's 17-year high of 13.4%. On the month, house prices fell 0.5% in July following a 0.7% increase the month before. The average price of a home was £244,229, down from £245,432 in June.
The stamp duty holiday, introduced by Chancellor Rishi Sunak last July to bolster the housing market, was extended from 31 March to the end of June. It meant that no tax needed to be paid on the first £500,000 of property purchases in England and Northern Ireland.
Nationwide's chief economist, Robert Gardner, said: "The modest fallback in July was unsurprising given the significant gains recorded in recent months. Indeed, house prices increased by an average of 1.6% a month over the April to June period - more than six times the average monthly gain recorded in the five years before the pandemic.
"The tapering of stamp duty relief in England is also likely to have taken some of the heat out of the market. The nil rate band threshold decreased from £500,000 to £250,000 at the end of June (it will revert to £125,000 at the end of September). This provided a strong incentive to complete house purchases before the end of June, especially for higher priced properties. For those purchasing a property above £250,000, the maximum stamp duty saving reduced from £15,000 to £2,500 after the end of June."
Andrew Wishart, property economist at Capital Economics, said: "The drop back in the Nationwide house price inflation in July suggests that the tapering of the stamp duty holiday has taken a little heat out of the market. But as the tax break was just one of many factors that have boosted housing market activity and prices this year, we expect house price inflation to cool rather than collapse."
He said low mortgage interest rates, high savings, and the reassessment of housing preferences due to increased remote working should all continue to underpin demand.
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