Market Insight: February 2021
In order to comment on any price changes in your local area, it is important to understand the impact of the Stamp Duty Land Tax (“SDLT”) changes on the types of property that were being sold last year. The line graph below illustrates how the number of transactions in higher price bands saw significant increases from 2019 to 2020 across Wirral and Cheshire West.
Percentage change in the volume of sales agreed by price band from 2019 to 2020 across Wirral and Cheshire West (Rightmove, 2019-20)
From December 2014, 5% of the purchase price over £250,000 and under £925,000 was due in SDLT following a review of rates. First time buyer (“FTB”) rates were introduced in November 2017 which meant that no SDLT was due on the first £300,000 of the purchase price, and 5% on the amount from £300,001 to £500,000.
The news of a SDLT holiday in July 2020 was huge for the property market amid fears that the Coronavirus pandemic could cause another market crash when trading resumed after the first lockdown. Until 31st March 2021 no SDLT is charged on properties purchased below £500,001, then 5% between £500,001 and £925,000. This presented a huge opportunity for buyers who may have previously been put off by SDLT rates in higher price bands.
What then occurred in the Wirral and Cheshire West market was a significant increase in transaction volumes in the higher price bands last year. According to Rightmove data, the number of sales agreed above £500,000 increased by 65% in 2020. On the flip side, there were fewer transactions below £150,000 despite a much more buoyant market.
Restricted access to mortgages in the second half of 2020 meant that those trying to get on the property ladder would need a much greater deposit than they would typically need. The good news for FTBs who have struggled to find a property in recent months is that once lower deposit mortgages (5% or 10%) become available again, no SDLT will be due up to £300,000. This will help inject activity in the £0-£250,000 price band later in 2021.
Across Wirral and Cheshire West, average property prices increased by 11.1% from 2019 to 2020. This figure relates to the average asking price for properties that had an agreed sale on the Rightmove platform, so the actual sold prices may have been slightly less upon completion.
Average asking price of sale agreed properties by postcode (Rightmove, 2019-20)
A total of six postcodes experienced an average price increase greater than 10% last year, which demonstrates market strength in many different areas across Wirral and Cheshire West. In fact, all but two postcodes experienced an increase in their average asking price in 2020.
The volume of sales agreed in Wirral and Cheshire West also recorded a significant increase of 14.7% in 2020, suggesting that higher asking prices last year didn’t adversely affect the demand for property in the local area. CH60 saw a huge increase in the number of sales agreed in 2020; 54.9% up on 2019.
Volume of sale agreed properties by postcode (Rightmove, 2019-20)
While this is really positive news for the local property market, it doesn’t necessarily mean that property value has increased by an average of 11.1%, or by the average increase experienced by each postcode.
We have already established that the SDLT holiday resulted in buyers offering on higher value property than in 2019. This essentially means that many buyers could realistically afford to buy a more expensive house, thus driving up the average asking price in the area.
At the same time, there has been little incentive to purchase property at the cheaper end of the market. With low deposit mortgages seemingly inaccessible, FTBs have struggled to get on the property ladder unless able to access additional funds in the short term.
Changes to SDLT in July 2020 naturally had the greatest impact on the £250,000 - £500,000 bracket, thus making the market much more open to current homeowners.
Annual percentage change in volume of new instructions and sales agreed by price band across Wirral and Cheshire West (Rightmove, 2019-20)
Property prices will always be influenced by supply and demand, which has experienced a very healthy balance in previous months. If the number of sales agreed outweighs the volume of new instructions then supply would run low and prices increase as a result.
In the last four months, the number of sales agreed on Rightmove across Wirral and Cheshire West is running at 98% of the new instructions coming to market. This is almost one sale for every new instruction that comes to market, highlighting how well the local property market is performing at the moment.
Demand for property is very strong and is likely to see further increases in average price should this market dynamic continue in the coming months.
If you would like to know what your property is worth, please click the link below to arrange your free valuation.
To be automatically informed about the latest market insight, please click here to subscribe.