It’s fair to say that the housing market performed more than robustly in March, which is perhaps one of the least surprising elements of 2021, given the sheer number of transactions that were in the pipeline, coupled with the requirement that they should complete before the original stamp duty deadline came and went.
According to the Bank of England, close to 191,000 residential transactions were completed during the month, which was – understandably – over double the number recorded in the same month the year previously, and close to a third more than in February this year.
It would be very interesting to see just how big that number might have been were it not for the change in deadline announced by the Chancellor at the 3rd March Budget. It effectively allowed conveyancers to re-prioritise their caseload and to re-allocate resources on these transactions which absolutely had to complete before the end of March to avoid consumer detriment.
For cases that did not fit the bill, that time pressure no longer existed in the same way, and I suspect there will be many housing market stakeholders who breathed a sigh of relief as a result.
As an example, both Stonebridge’s mortgage applications volume but, perhaps more pertinently, our completions were just as strong during April as they were during March, which indicates how helpful the deadline extension was.
Of course, what might be of more interest now is how the rest of the year is likely to play out, especially given one of the major concerns around the original stamp duty deadline was the fear it had dragged forward an element of the total 2021 activity that which would have ordinarily completed during the balance of 2021.
Stamp duty incentives are understandably seductive; regardless of what type of purchaser you are, if you were going to have acted at some point during 2021, then it is likely to have altered your timescale.
The fact that we now effectively have two extensions, at the end of this month and the ‘partial’ holiday up until the end of September, means that the concertina potential of those transactions all being pushed into a smaller window is undoubtedly reduced.
And you might also add that the Chancellor’s decision to extend, has sharpened the thinking of those who might have believed they had missed the boat first time around. We’ve certainly seen a further burst of activity since then and our anticipation is this will continue through until the end of September, perhaps slightly dropping off then but not by anywhere near the cliff-edge that had been feared.
In that sense, while some argue against the ‘two deadline’ scenario what it has undoubtedly done is dissipated Q1 completion pressures, driven further demand into the market, and given consumer demand a chance to complete with a degree of stamp duty avoidance.
Throughout the course of the year therefore we anticipate the momentum of the past six months to continue although there is still the unknown in terms of what might happen at the end of September. What we do know is that, for instance, first-time buyers will continue to benefit from a stamp duty saving even then, plus we have a growing number of high LTV options for both first-timers and those seeking to move up the ladder to take advantage of.
A lot is being currently said about house price inflation, driven in some part by the stamp duty holiday, but undoubtedly much more by supply-side issues. The measures announced by the Government in the Queen’s Speech seem like another attempt to right this particular wrong with less friction in the planning process leading to more developments.
Even with this, and ongoing attempts to turn retail businesses into residential complexes and the like, I think it is fairly certain the UK will still be unable to meet the supply of housing it needs to meet demand. It won’t need an economist to tell you what that will mean for prices – a short stamp duty holiday plays a small part in price increases but nothing like the part played by an overall shortage of homes over many years.
For us in the intermediary space, the market continues to look very positive. Coming out of the pandemic – fingers crossed – should increase further the interest in buying/selling, greater confidence to view properties, and the need for mortgage advice, particularly those who might have encountered some elements of financial complication over the last year and a half. Coupled with a strong lending appetite, the future looks bright well past the ninth month of 2021.
Rob Clifford is chief executive of Stonebridge