Stamp Duty and Market Review

It has been a busy 6 months in Northampton with a record number of transactions taking place and more in the pipeline than we have seen since the change in stamp duty back in 2016. This new found demand has also driven prices up by as much as 10% in the same time period, growth that we have not seen since 2006!

But the real question is what is driving this and how long will it last?

Well, let’s start with the obvious; the temporary freeze on stamp duty. This provided the catalyst to a market that had huge pent up demand! Throughout 2020 with various lock downs many people were not only unable to move but, many found themselves staying in saving an unprecedented amount of money, (who else had a shock when they bought their first round in the pub after nearly a year!) With this many who would have bought in 2020 rolled over to 2021 meaning demand was naturally higher.

This combined with a mortgage market that is stronger than ever has mean even more people again are looking to move. The introduction of 5% deposit mortgage products enabled first time buyer to get “on the ladder” for less, and with interest rates sitting around 1% borrowing is very affordable. It is also worth mentioning that we are seeing the biggest shift in how people work since the industrial revolution; with homes offices and online meetings becoming the norm. People traditionally living in smaller properties are now looking to upsize to give them more space to create an efficient working environment.

So what does this mean going forward?

With so much in the pipeline to complete post the stamp duty holiday, in the short term I can’t see any great changes in the market. With the mortgage market the way it is at present, this for me, is underpinning the strong growth in the market and will continue to do so into next year. Admittedly some sales are dependent on the stamp duty holiday, but this is a relatively small proportion with the previous extension of the stamp duty holiday helping manage people expectations and lift the burden of those who were reliant on the relief.

In the medium term we may see a stagnation in the market, or perhaps even a small correction, as demand for property vastly outstrips the supply causing what I would consider to be unsustainable increases in prices. As prices rise, buyer demand will begin to drop and in doing so will cool the market leading to stagnation following property price cycles we have historically seen.

But for now, it very much a sellers’ market, so if you’re considering moving now could be the perfect time!