The asking price for properties has dipped by 0.5% in October, according to property website Rightmove, as home sellers look to close sales ahead of the stamp duty holiday deadline. The price cut, equivalent to a reduction in value of around £1,505, suggests a slowdown in the burgeoning value of properties since the end of the first national COVID-19 lockdow.
This is despite evidence of strong buyer interest in properties; Rightmove reported that the first six days of the second lockdown saw demand up by 49% over the previous year. The most significant growth in activity has been observed in properties between the price band of £400,000 - £500,000, on which buyers stand to make the most significant savings in stamp duty.
The property giant has previously revealed that a sale is twice as likely to occur if the sellers manage to attract buyers at the asking price at which the property first goes onto the market. An asking price that is too high at the outset is much more challenging to close, even if the sellers eventually reduce the price to a more reasonable level. Rightmove predicts that as the deadline for the stamp duty holiday looms closer, this factor will become even more critical in closing sales.
The stamp duty holiday, which was introduced by Chancellor Rishi Sunak earlier this year, applies to all property sales taking place before 31st March 2021. Under the revised regulations, the threshold beyond which buyers were required to pay stamp duty land tax on property increased from £125,000 to £500,000. This means that buyers seeking investment properties could stand to save as much as £15,000 on the purchase of second homes.
Nationwide estimated earlier this year that the new regulations would result in around 90% of UK property transactions having zero payable stamp duty, making it an appealing time for buyers to consider investing in property.
However, the latest Rics survey of property agents last week suggested that activity in the housing market has slowed slightly after a surge in recent months. While October saw increased buyer demand, and sales and prices remain solid, the longer-term outlook for the market looks 'subdued', Rics warned.
Additional stimulus to the housing market has come in the form of the recently announced news regarding a potential vaccine to coronavirus. However, some believe that the likelihood of a vaccine in the near future may conversely push sellers to hold out for higher offers. Experts believe that the housing market’s volatile trajectory is likely a result of the ongoing economic depression and that it will take some time before it begins to stabilise.