Property market to slow as number of collapses in agreed sales rise

Collapses in agreed sales approach record highs with the end of Stamp Duty holiday imminent, as house price rises set to cool in 2021, but will they fall from record highs?

David Hannah, Founder of SDLT specialists, Cornerstone Tax, discusses the implications on the market in the long term.

New figures from property listing website Rightmove show that the percentage of agreed house sales that collapsed rose from 17% in July 2020 to a staggering 28% in December.

Major delays and a turbulent economic climate brought about by the pandemic have evidently posed a significant problem for house-buyers, with over a quarter of house sales now falling through. But with the end of the Stamp Duty holiday rapidly approaching, buyers are under more pressure than ever to complete their deals before March 31st.

Now, with the country embroiled in a third national lockdown, the logistical strain placed on the housing market is unlike anything seen in recent memory, and the rising demand has created a bottleneck, resulting in the conveyancing process being dramatically extended. Furthermore, many house-buyers are finding that they are unable to access loans for their purchases, as the pandemic has affected their careers and made lenders more wary of their mortgage offerings.

As a result, many commentators are calling for the Stamp Duty holiday to be extended, to alleviate pressure on the housing market and the logistical overload brought about by the pandemic, and to give house-buyers the time and security they need to complete purchases.

David Hannah, principle consultant and founder of Cornerstone Tax, explains why such a tight Stamp Duty holiday deadline is putting the housing market under intense pressure:

“These statistics are shocking, if not wholly surprising, when you consider how many people are trying to take advantage of a scheme that is rapidly approaching its end. This kind of hard deadline was bound to lead to this kind of bottle neck and demand is sure to fall considerably when it passes. In any market consistency and certainty is key to overall stability and growth. Growth so far has come from artificially inflated demand but does not look long term.

“Now with the end of the Stamp Duty holiday imminent, home-buyers across the country are desperate to complete the conveyancing process, lest they pay thousands more for their new properties. This has resulted in a logistical nightmare for the housing market, and will likely result in many more deals falling through.

“A cliff-edge end to the Stamp Duty holiday is simply inviting a catastrophe, as buyers and sellers alike will realise they will likely miss the deadline and withdraw from the deal. Not only this, but many buyers will miss out on the deadline and will then simply be unable to afford a move.”

Kindly shared by Cornerstone Tax

Main article photograph courtesy of Pixabay