The housing market in the UK turned ice cold from June to July with sales volume dropping more than -60%.
UK Home Prices Dropped Along with Sales Volume from June to July
After months of pandemic-driven price appreciation in the UK, home values dropped -3.7%, according to the government’s Land Registry. This -3.7% price drop was the most significant drop since 1992 and the second biggest decline since 1968, according to the UK’s government Office for National Statistics.
On the bright side of the ledger for sellers, however, home prices increased +8% y/y. The average price of home in the UK came in at UKL225,535 or US$353,328.
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Areas Where Price Gains Strongest & Weakest
The North East of England, the UK’s most affordable region, saw the strongest annual gains with price increases of +10.8% in the year to July at UKL144,935.
London, the most expensive region in the UK, saw the weakest annual price gains at +2.2% over the same time period with an average home price of UKL494,67.
The slump in prices partnered up with the slump in sales volume. Home sales plummeted in July from June’s sales a remarkable -62.8%, according to Knight Frank.
Why Such a Huge Price Drop?
Most industry experts point to the adjustment of the stamp duty holiday at the end of June. Introduced a year ago in June to buoy the housing market during the onslaught of the COVID pandemic, the stamp duty holiday vetoed the property transfer tax on the first UKL500,000 of a home sale. At the end of this June, the threshold of the nixed tax dropped from UKL500,000 to UKL250,000 and buyers rushed into sales contracts to take advantage of the greater savings before time ran out as of July 1.
The stamp duty holiday will end as of September 30 and revert back to its usual tax at the usual amount of UKL125,000.
UK Housing Market Projections Through End of 2021
With this monthly decline in both sales volume and prices, the highest monthly decline from June to July in nearly 30 years, Knight Frank anticipates that the UK housing market will end the year with annual growth standing in single digits.
Tom Bill, head of UK residential research with Knight Frank, said, “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 hopefully) disappears into the rear-view mirror. The key question is 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.”
Thanks to MansionGlobal.
