Market Insight: June 2021
Stamp Duty holiday deadline approaching
For the second month in a row, the volume of new instructions and sales agreed on Rightmove across Wirral and Cheshire West have seen a decline. This is certainly nothing to be concerned about and, at this stage, shouldn’t be considered as a sign of a shrinking market.
Monthly volume of new instructions and sales agreed in Wirral and Cheshire West (Rightmove, 2020-21)
The reality is that activity levels were unlikely to be sustainable following the extension of the Stamp Duty Land Tax (“SDLT”) holiday in February, which triggered an injection of new properties to market in March and April. Without this injection, the stock levels would have continued to fall and placed increased pressure on prices as more buyers compete for a smaller pool of properties.
The ratio of new instructions to sales agreed has been virtually 50:50 over the past three months which makes for a very healthy property market. The ratio would typically favour new instructions as many properties ultimately withdraw from the market without finding a buyer, but this market is showing that many more properties than usual are achieving a sale.
With the current SDLT holiday due to end on the 30th June, buyers and sellers who may have struggled to cross the line in March should have been able to finalise their move if everything went to plan. However, the government SDLT holiday scheme doesn’t end there; there will be no SDLT due on properties up to the value of £250,000 for a further three months until 30th September 2021.
The average Rightmove new instruction price across Wirral and Cheshire West in May was £240,381 which should mean there are still plenty of properties out there which would fall within the £250,000 SDLT holiday threshold from July.
Average new instruction price by postcode in 2021 (Rightmove, 2021)
There was quite a sharp rise in the average new instruction price through the first quarter of 2021, but a 5.7% decrease in May is a sign that fewer ‘higher’ value properties are now coming to market; unsurprising given SDLT charges will return to properties valued above £250,000 in a matter of weeks. Sales levels are still very high so the fall in average instruction price is certainly not indicative of a struggling market.
The average length of time for a property to agree a sale became even shorter in May, with buyers eager to secure their purchase amid strong competition. Over 50% of all sales agreed in May only took four weeks or fewer to find a buyer after launch on Rightmove across Wirral and Cheshire West, compared with 37% from June to December last year. There’s no doubt estate agents and solicitors have been kept very busy over the past few weeks!
May 2021 sales agreed in Wirral and Cheshire West by time to agree sale (Rightmove, 2021)
Signs of growth in rentals market
Due to the popularity of the SDLT holiday initiative, the local rentals market has taken a back seat when it comes to activity in recent months. If we examine our own levels of lettings applicant registrations over the past year, there was a heavy drop in numbers from September to December last year, followed by a very inconsistent rise throughout 2021.
Monthly volume of new lettings applicants registered by Karl Tatler Estate Agents (Karl Tatler Data, 2020-21)
The level of new applicant registrations is a real barometer of how strong the rentals market is likely to be going forward, which looks more positive after a record high month for 2021 in May. With the SDLT deadline coming up, there could well be a shift back towards rentals as demand increases in this sector. If the number of new applicants continues to rise then there will need to be more stock available to meet demand.
Plenty of positives going forward
The popular phrase ‘the only constant is change’ certainly applies to the local property market as we look ahead to the summer months. Thanks to the SDLT initiative, we have endured a fairly predictable period of time where activity levels have been extremely high when there would normally be more of a cyclical pattern to the market.
Once the deadline was extended by a further three months to 30th June, we saw a spike in activity levels as we did back in July when the scheme was originally introduced. It is fair to say that the scheme has done it’s job; the housing market has been more than stable throughout a period of economic distress, but the number of transactions being processed is unsustainable even if the incentive continued indefinitely.
To soften the impact, the government have lowered the SLDT threshold to £250,000 for a further three months before it returns to £125,000 in October. Of course, first time buyers will continue to benefit from their own incentives as before, and should now be able to access 5% mortgages from most lenders.
There is likely to be a drop in activity over the next few weeks as the 30th June SDLT deadline approaches, but nothing too extreme given there are still plenty of buyers who can still benefit from the £250,000 threshold. The warmer weather and Euro football tournament may also provide a distraction, however this is just a sign of a returning cycle of the property market.
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.