House prices rise 5.8pc despite looming risk buyers will miss stamp duty deadline
The stamp duty holiday and pent-up demand after lockdown pushed 12-month house price growth to a five-year high of 5.8pc in October, new data shows.
The average British home cost £227,826 this month, a jump of 0.8pc from September, according to Nationwide building society’s house price index.
Homes now cost £12,458 more than they did a year ago. But experts have warned activity could stop “sharply” and pries could fall.
Robert Gardner, of Nationwide, said that the outlook for the market remained “highly uncertain” as unemployment rose and Britain’s economic recovery slowed.
The future of house prices would depend "heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy,” Mr Gardner said.
Economic growth in August slowed to 2.1pc from a rate of 6.4pc in July, despite the success of the Eat Out to Help Out scheme.
Unemployment in August hit 4.5pc and the furlough scheme, which is still supporting the wages of an estimated 2 million people, will end on Saturday.
Mr Gardner said housing market activity would slow in the coming months, sharply, if the labour market weakened as most analysts expect. It would definitely slow down once the stamp duty holiday expired at the end of March, he added.
Concern is mounting that the cliff-edge March 31 tax deadline will cripple the market. Buyers are rushing to transact to take advantage of savings while the industry’s processing capacity has been reduced due to working from home.
Delays are significant and data company TwentyCi estimated some 325,000 buyers would miss the tax deadline altogether.
Earlier this week, the Home Buying and Selling Group, an industry group, along with a selection of estate agents, surveyors, conveyancers, mortgage advisers and solicitors, wrote to Chancellor Rishi Sunak urging him to extend the deadline to prevent “consumer detriment”.
Increasing lockdown restrictions across the country have slowed down the buying process as it is under time pressure.
Jeremy Leaf, a north London estate agent, said: “On the ground, we’re seeing fewer viewings, offers and longer transition times as lenders and conveyancers struggle with the backlog.”
Yet activity is still booming. “We don’t expect huge change until it is almost impossible to take advantage of the [stamp duty] concession,” said Mr Leaf.
When the tax break does stop, however, the market could turn quickly. Anne Clare Harper, of SPI Capital, an asset manager, said: “There are some concerns that we are moving into bubble territory.”
