The UK’s housing boom is showing no sign of slowing down, with the number of sales agreed in March hitting fresh highs as buyers take advantage of the extension of the government’s stamp duty holiday.
Property data company TwentyCi said 160,000 sales were agreed last month, representing the highest monthly tally since the company began collating records in 2017.
The number of transactions was one of the highest monthly totals since the financial crisis more than a decade ago, according to Lucian Cook, head of UK residential research at estate agent Savills.
Cook said that, according to his calculations, there had only been one month since early 2007 when the number of sales agreed have hit a higher level, which was March 2016, when there was a rush by second home buyers to beat the introduction of a stamp duty increase that April.
Stamp duty was a key factor in last month’s surge in activity too, he added. The government’s stamp duty holiday, introduced in July aimed at boosting the housing market during the pandemic, was originally due to end on March 31. But chancellor Rishi Sunak announced in early March he was extending it for another six months.
“I think people have spotted a second window of opportunity to cash in on the stamp duty holiday now it has been extended,” said Cook. This is expected to drive another big spike in demand up to the end of June, before which buyers pay no duty on purchases up to £500,000 — which offers a saving of up to £15,000.
After that date, until the end of September, the exemption reduces to the first £250,000 of a property’s value, capping the maximum saving at £2,500.
Wealthier buyers have largely accounted for the strong sales since the housing market reopened last May and TwentyCi data showed that trend continued last month, with demand particularly high for homes priced between £500,000 and £1m.
The number of sales agreed in that price bracket in March was more than 50 per cent above the total agreed in February last year, the last month of normal activity before coronavirus hit. Typically, 75 to 80 per cent of sales agreed reach completion, according to Cook.
Sales are up at the more affordable end of the market too, but by a lower proportion. In March, sales agreed for homes priced between £100,000 and £200,000 were 18 per cent above last February’s levels.
Nationally, demand for homes continued to outstrip supply. Cook said potential sellers were put off by the coronavirus lockdown and anxiety about having people in their homes. Since restrictions were tightened in December, the number of properties coming to market has dipped below recent averages and for each of the last nine months the number of sales agreed has outstripped new homes coming to market.
In the short term, that is likely to mean more upward pressure on house prices, which have risen on average by 5.7 per cent to £232,134 in the past 12 months, according to Nationwide building society.
Beyond June, when the stamp duty saving will be capped at £2,500, demand is likely to slacken according to Neal Hudson, a property analyst at Built Place, but he thought a sharp drop was unlikely.
“The [stamp duty] holiday is definitely a big factor driving sales, but the re-evaluation of housing needs through the pandemic has also been a large driver . . . It is possible that when it ends we will see price falls but my suspicion is we will still see demand from those looking to change lifestyle,” he said.