LONDON (CU)_In July last year, the government of the United Kingdom launched a stamp duty holiday on property purchased in England and Northern Ireland to ward off a collapse in the housing market amid the COVID-19 pandemic. Now, with the tax break being phased out, demand for bigger homes is seeing a noteworthy decline, which resulted in a fall in house prices for the first time this year.
According to recent data issued by Rightmove, the national average asking price for a house fell by 0.3 per cent to £337,371 (US$463,615) over the past month. Nevertheless, the property website pointed out that these figures did not provide a clear picture on the wide variations in house prices between different types of property. It said buyer demand remained strong for small properties, with the value of properties sought by first-time buyers and families seeking a second home rising to record levels. By contrast, average prices for houses with four bedrooms of more declined by 0.8 per cent since buyers were unable to make large savings on stamp duty.
In July last year, the government raised the level at which tax on property purchases to be paid from £125,000 to £500,000, which prompted a boom in property values as buyers scrambled to cash in on the tax break. However, in July this year, this figure was brought down to £250,000 and is set to return to the pre-pandemic level in October.
“Average prices have only fallen in the upper-end sector, which is usually more affected by seasonal factors such as the summer holidays and has also seen the greatest withdrawal of stamp duty incentives,” Rightmove’s director of property data, Tim Bannister, said. “The mass market of properties that cater for first-time buyers and second steppers is still seeing high demand and upwards price pressure, leading to new record high average prices in those sectors.”
