The stamp duty holiday is only one reason activity in the UK property market is currently so strong
There are several reasons why March 2021 was one of the busiest months on record for the UK property market.
Before we explore them, what do the statistics tell us?
The number of UK exchanges last month was the highest in ten years, Knight Frank data shows.
The figure was 9% above the second-highest month (December 2020) and 12% higher than March 2016, the month before the introduction of a 3% stamp duty surcharge.
The end of last month also coincided with a stamp duty deadline before the Chancellor moved that particular set of goalposts to later in the year.
The records weren’t limited to exchanges. The number of new prospective buyers registering in March was also the highest in ten years, possibly encouraged by a deferred stamp duty holiday deadline.
However, to attribute high levels of activity to either the original or new stamp duty deadline would be an over-simplification.
The number of offers accepted in March was also the highest such figure in a decade, a fact that doesn’t appear related to stamp duty. If anything, news of an extended holiday could have slowed transactions already underway. March was also the second-highest month in a decade for the number of offers made.
In an era of social distancing, it was also the fourth highest month in ten years for viewings, which demonstrates how the market is being propelled by other forces. In broad terms, the strengthening economy and gradual return to normality are playing a key role.
This week, the IMF said the UK economy would grow by 5.3% in 2021, up from a previous forecast of 4.5% in January, helped by a successful vaccination programme and stimulus measures.
“The UK housing market is in the middle of a perfect storm,” said Tom Bill, head of UK residential research at Knight Frank. “Sellers who hesitated in the first two months of the year because they were home-schooling or had concerns about missing the stamp duty deadline are now listing their property.
“Meanwhile, the prospect of summer holidays means a spring surge in activity is more discernible this year, buoyed in many cases by high levels of personal savings accrued over the last year. The successful vaccine roll-out and encouraging economic indicators are providing the mood music.”
For these reasons, the surge seen last month is likely to continue until at least the summer.
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