Market Commentary – 2021 Review

Transaction Taxes & A Tax Cut For The Top End

The Credit Crunch & Levelling Up House Prices

Supply Squeeze & Looking Ahead

The housing market in 2021 was full of stamp duty deadlines, soaring transactions, and rampant house price growth. The top end of the housing market boomed while first time buyers struggled thanks to a credit crunch and renewed interest from buy-to-let investors and second home owners. The housing market now faces a supply squeeze with a lack of homes available for sale while the threat of rising interest rates looms large. This note provides a brief review of the housing market in 2021 and looks ahead to what might happen next.

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Market Commentary – November 2021

The Quiet After The Storm

Lack of Supply And Low Mortgage Rates

The storm of stamp duty driven activity has eased and December/January are usually a quieter time for the housing market. While normal seasonal trends have been disrupted in recent years, there are some signs that the market is returning to more normal patterns this winter. However, these same seasonal patterns are likely to further reduce the already low number of homes available to buy. That could put further upwards pressure on house prices, especially if prospective buyers feel the need to rush their purchase ahead of any interest rate rises.

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Market Commentary – October 2021

Looking Ahead But Don’t Look Back

Rising Rate Risk

Transactions – A Return To Trend?

As the end of the year draws nearer, attention is increasingly focussed on what might happen to the housing market in 2022. There may be two months of the year left but estate agents, economists, and market commentators have been busy updating their house price forecasts for next year. After last year’s poor showing, forecasters’ expectations for 2022 are much lower than the growth recorded so far this year. High inflation and rising interest rates are a major cause for concern, while transactions are unlikely to repeat this year’s stamp duty holiday fuelled boom. This month’s market commentary looks at the latest OBR forecasts for the housing market.

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Market Commentary – September 2021

Delayed Data

Tax Cut For The Top-End

The Race For Space

As the stamp duty holiday finally comes to an end, six months later than originally planned, we are only now beginning to get useful publicly available data that can tell us what homes have been selling and where since it began. This month’s market commentary uses Land Registry transaction data to investigate what has been happening in the housing market since it reopened last summer up until the first spike in transactions in March 2021, when the stamp duty holiday was originally scheduled to end.

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Market Commentary – August 2021

New Build’s Missed Opportunity

Housing market activity has boomed over the last year but there is at least one part of the market that appears to have missed out: new build homes. A combination of drivers including the stamp duty holiday and race for space have helped propel transactions to levels not seen since 2007. But, while new housing supply has recovered to normal pre-pandemic levels, it appears to have missed out on the current boom in demand from home buyers.

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Market Commentary – July 2021

Strong Demand, Uncertain Depth

Constrained Supply

Seasonal Market

The UK’s housing market is booming with record high levels of transactions and rising house prices. But these higher levels of activity have also raised growing concerns from estate agents and others that there is insufficient housing stock available on the market to buy. This lack of stock for sale is apparently contributing to rapidly rising house prices as buyers rush to beat the end of stamp duty holidays amidst a fear of missing out. This note looks at what has been happening in the market and questions if the autumn market will bring new sellers to the market.

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Market Commentary – June 2021

Rampant House Price Growth

Weighting and Wondering

First Time Buyer Squeeze

House prices are still rising rapidly and market activity is higher than pre-pandemic levels. But the temporary cuts to property transaction taxes have now ended or are in the process of being tapered off. This should bring greater clarity on the drivers of the current housing boom but it appears the higher than normal levels of market activity and rampant house price growth could continue past their end. However, there are some issues with the house price growth rates currently being reported that could mean price growth is lower than they suggest. Meanwhile, new data provides further detail on the squeeze that has been facing first time buyers since the pandemic started.

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Market Commentary – May 2021

Fear Of Missing Out

Continue Cycle or Start New

Last month’s market commentary looked at whether the housing market is in a bubble, short-term boom, or a new normal. We concluded that it was too early to know but there are some rational explanations for what is happening to the housing market here and in other countries. Since then, the market has continued to boom with high levels of sales agreed, low levels of homes being listed on the market, and rising house prices. But, as the boom continues, there is one factor that could increasingly lead to irrational decisions: the fear of missing out.

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Market Commentary – April 2021

Housing Bubble or New Normal

Not So Special

A Tax Cut For All

With house prices booming and transactions double their normal level, there are growing concerns that the housing market is in a bubble. It is also clear that there have been profound changes in the market since the pandemic hit, with many people reassessing what they want and need from housing. So, is this a house price bubble or are we seeing the start of a new normal created by the pandemic?

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Market Commentary – March 2021

High Transactions, Low Turnover

Stuck In Our Homes

The stamp duty holiday may have been extended but the number of transactions is still high thanks to its late announcement and the continued race for space. However, despite the current high levels of transactions, the proportion of housing stock that transacts each year is still very low and this creates a number of problems including higher volatility. This note also looks at the demographic factors that are contributing to low turnover.

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