UK property market broke records in Sept. And then THIS happened

Was the UK property headed for ‘the moon’?

No, not quite. (It’s probably a good thing we don’t see property prices gain 10,339,116% in 15 months like the Shiba Inu coin has)

However, on Nov. 17 Her Majesty’s Land Registry published a September UK Price Index that showed UK property prices have been breaking some records of their own.

• ​Prices were up 11.8% since September 2020
• House price growth was strongest in the North West where prices increased by a stunning 16.8% in the year to September 2021
• The average price of UK property hit GBP 270,000 for the first time in history
• Zoopla.co.uk, a major property platform, estimates about 1.5 million sales to take place across the UK this year, making it the busiest market since 2007

But some said the party simply couldn’t continue… and maybe they were right.

When the September numbers came out, and the general consensus among the ‘market elders’ seemed to be that this trend won’t continue into 2022. For several reasons:

• Wake me up when September ends: The Stamp Duty Holiday has finally come to an end. First introduced in July 2020 to get the property market through the pandemic, the SDLT holiday got extended many times, then finally phased out on September 30, 2021. The ending of the holiday would take some heat out of the market.
• Jolly season: The holidays are coming up, which is usually a quieter time for the property market. Many buyers have it in their heads to ‘Buy before Christmas, and move after Christmas.’ Property markets need to hibernate, too!
• Expensive money: With interest rates going up soon, it’ll be more expensive to borrow, dampening demand.

And sure enough, on Nov. 23rd, Her Majesty’s Revenue & Customs published a commentary that the number of property transactions in October 2021 were down by 28.2% from Oct 2020, and a shocking 52% lower than Sept. 2021. Yes, that’s half!

Although this can sound shocking, it’s not all that surprising. This is a classic example of ‘forestalling’, where buyers anticipated the end of the stamp duty holiday and hurried to complete their purchases in September. In October, the market understandably took a ‘breather’ after such a frenzied buying cycle.

Although the number of transactions halved from Sept to Oct., this doesn’t mean that property priced halved as well.

Does this mean that we’ll see a massive crash in 2022?

Hmm, maybe, but probably not. The fact remains that estate agents are saying that they don’t have enough listings on their books, which tells of a chronic shortage in housing. This is a major factor in supporting prices.

Savills, a property research and consultancy company, released a house price forecast for the UK, estimating growth of 13.1% over the next 5 years. It sounds oddly specific, but reasonable enough.