Biggest monthly fall in house prices since 1992 as stamp duty holiday taper calms market

The two per cent fall in London in the month to July was echoed throughout the country, with UK house prices down 3.7 per cent.
Matt Writtle

House prices in London dropped to £495,000 between June and July this year as the stamp duty holiday taper took effect.

The two per cent fall was echoed throughout the country, with house prices down 3.7 per cent throughout the UK as the flurry of home movers calmed, according to the latest Land Registry data.

This was the biggest monthly fall since 1992, according to Tom Bill, head of UK residential research at Knight Frank. He said: “Like a bad Hollywood blockbuster, the UK housing market looks like it will have a predictable finale this year after an explosive start.

“Demand remains robust and the economic backdrop increasingly has a feel-good factor as Covid disappears into the rear-view mirror. The key question is by how much supply picks up as autumn approaches.

“We expect seasonality and needs-driven buyers to play an important role in driving supply higher, which should start to curb house price growth. The monthly decline in July was the largest since 1992 and the second steepest since 1968 and we therefore expect annual growth to end the year in single digits.”

Average prices across the country were up 13.2 per cent on July the previous year, when the stamp duty holiday was first introduced – heralding months of record home sales.

London house prices saw the smallest rise in the country, up 2.2 per cent, compared to the North East which topped the table with a house price rise of 10.8 per cent.

Agents reported more sellers putting their homes on the market as they return from summer holidays but said that buyer demand still outstrips supply, meaning house prices are likely to continue their year-on-year rise for the rest of the year.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “This most comprehensive, although a little dated, of the house price surveys demonstrates the determination of buyers to stay in the market even though the maximum stamp duty concession was no longer available.

“Prices are a little lower than the previous month, which is understandable, but were still supported by low interest rates and lack of supply in particular.

“We have seen signs, on the ground, in the past few weeks, that more property is becoming available as sellers return from holiday, setting the scene for a fairly busy autumn market.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said the low interest rates and wider mortgage availability post-lockdown mean more buyers are in a position to buy than when stricter financial restrictions were in place.

“In contrast to early on in the pandemic when lenders pulled up the drawbridges, there is an eagerness to lend, with average mortgage rates on two- and five-year fixes falling to all-time lows. With twice as many mortgages available now compared with a year ago, borrowers are in a strong position. Assuming they can find the property they wish to buy, thanks to limited supply, there is plenty of choice of mortgages at low rates.

“The market is set for a strong autumn. While the stamp duty holiday comes to an end later this month, there are still many buyers who wish to move to get more space, and cheap mortgages will help them do that.”

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