New research from LonRes has revealed that buyers and sellers were very keen to take advantage of the recent stamp duty holiday, with the number of new instructions and transactions rising by 72% and 40% respectively over the past year.
New instructions in March were 72% higher than the year before, with new listings having increased by 24% over the five-year average. All price brackets recorded an annual increase in sales. But the market under £1 million was busiest over the last three months, with a 52% increase in the number of properties sold compared with the same period a year earlier.
Head of Search at LonRes, Marcus Dixon spoke to Property Wire about the increase and factors which may have affected sales:
“The run-up to the end of the stamp duty holiday on 31 March was always going to be a busy time for the housing market and prime London was no different. Encouraging news on the vaccine roll out, together with a detailed road map out of lockdown resulted in a renewed confidence for London’s prime housing market and a surge in activity over the first quarter of the year.”
During the first two months of 2021 the number of new instructions was relatively subdued, with volumes listed for sale falling short of both the previous year and longer run five-year average (2015 to 2019). This is because at this point vendors thought that the stamp duty holiday would be ending on the 31st of March with the possibility of buyers being able to complete their purchase before the deadline looking very slim. However, once the Chancellor Rishi Sunak announced a three-month extension to the stamp duty holiday in the spring, market confidence was boosted significantly, helped by the vaccine rollout and the government publishing their roadmap out of lockdown.
Subsequently, there was a significant rise in new instructions in March, with 24% more properties listed than the March five-year average (2015 and 2019) and 72% more than in March 2020 (although of course, some of March 2020 was spent in lockdown).
Speaking about the deadline extension, Dixon added:
“With the stamp duty holiday deadline initially set for the end of March, new instructions were subdued. But the announcement of an extension in the Spring Budget brought with it a rise in the number of new properties coming to the market and boosted the month overall. It was the market below £1 million that saw the most significant annual increase in sales – unsurprising given this is where the biggest saving, as a proportion of total buying costs, was to be made. But the top end of the market did well too. Despite travel restrictions still being in place, limiting overseas buyer demand and the stamp duty holiday being of less financial importance we saw transactions rise in this market as well. Transactions at the top end of the market were higher than both the 2020 and long run average in Q1.”
However the growth in activity seems to be caused by more than simply just stamp duty savings and the increased momentum appears set to continue. Comparing the number of homes put under offer in Q1 2021 there is a 26% annual increase (27% higher than the 2015 to 2019 average), with the number of properties put under offer the highest first quarter figure since Q1 2014.
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