End of stamp duty holiday may trigger drop in house prices, experts say
The government’s stamp duty holiday is set to end next month and experts are predicting that this could see house prices go down.
Property site Right Move warns that around 100,000 deals could fall through if the tax bread isn’t extended, reports the Sun.
The chancellor cut the land tax duty on the first £500,000 of a property sale in July to boost the market during the Covid-19 lockdown.
Rishi Sunak claims the break could save buyers around £4,500 when moving house.
In reality, the duty holiday caused a mini boom in property and hiked house prices up by an average of 8.5%, according to the Office for National Statistics.
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Since the beginning of 2021, prices have begun to drop again as we approach the end of the stamp duty break which stops on March 31.
In January, the cost of the average UK home dropped by 0.3% compared to the end of 2020 – to £251,968 according to Halifax.
This show down comes gayer mortgage brokers Trussle warned that half of property deals made in November wouldn’t make the deadline.
It’s predicted that property prices will fall by between 2% and 5% this year, according to Halifax.
While Zoople believes valuations will peak by 5% in February before dropping to 1% at the end of the year.
Property platform Twindig thinks prices will drop by £2,500 on average.
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Twindig boss Anthony Codling said: "House prices have increased because more people are looking to buy a home than sell one.
"This could change once the stamp duty holiday ends as buyers no longer need to rush and can afford to take their time.
"Once the stamp duty holiday ends we expect the housing market to be quiet until the UK economy is fully re-opened.”
But, other experts don’t think the market will slow down after the end of the duty holiday as people look for more room and bigger houses after lockdown.
Paul Stockwell, chief commercial officer of Gatehouse Bank, said: "We don’t expect demand to abate when the stamp duty holiday does end, and, whilst this may hamper growth slightly, we expect to see the market continue to rise with demand this year too."
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