UK house prices fell in August amid waning demand for larger homes after the government slashed stamp duty relief for buyers in England and Northern Ireland this summer, according to Rightmove.
The real estate website said the national average asking price for a house fell 0.3% to around £ 1,000 over the past month and now stands at £ 337,371. However, he said buyer demand remained strong for smaller properties in particular, and that he expected a “fall rebound” in prices.
Further sign of the cooling of the housing market after the government changed its stamp duty rules earlier this summer, ending a boom in property values as buyers rushed to take advantage of the tax break , the figures come after the Nationwide construction company said house prices fell 0.5% in July. Rival lender Halifax said prices rose 0.4% in July, but predicted house prices will drop in the coming months.
The government took the first steps in July to reduce its stamp holiday for property buyers in England and Northern Ireland, which was first initiated by Chancellor Rishi Sunak last year to avoid a collapse of the housing market during the first Covid lockdown.
Buyers paid no stamp duty on the first £ 500,000 of the purchase price until the end of June. The threshold at which the tax on property purchases begins fell to £ 250,000 on 1 July. In September, it returns to the pre-pandemic level of £ 125,000. First-time buyers can buy homes up to £ 300,000 without incurring stamp duty from July 1. A similar tax break in Scotland and Wales has ended.
Rightmove said its main results masked large variations between different types of property.
He said the overall monthly drop was due to a 0.8% drop in average prices for homes with four or more bedrooms. With buyers no longer in a position to make significant savings on stamp duty, he said the typical asking price had dropped by £ 4,699.
In contrast, he said small properties sought after by first-time buyers and families looking to relocate to their second homes continued to rise in value to record highs.
Tim Bannister, Director of Real Estate Data at Rightmove, said: “Average prices have only fallen in the high-end sector, which is generally more affected by seasonal factors such as summer vacations and has also seen the greater withdrawal of stamp duty incentives. The mass market for first-time and second-stage properties continues to experience high demand and upward pressure on prices, resulting in new record average prices in these areas.