The temperature has been rising in the housing market since the start of the year. The introduction of the Stamp Duty holiday meant that the average price of a house in the UK climbed to the heady heights of £265,000 in June 2021. However, the phasing out of the tax break has meant that house prices have started to level off. While they were still 8% higher in July 2021 than in July 2020, they fell 13.1% compared to the previous month. According to Rightmove, the national average asking price of a home fell by 0.3%, or around £1,000, during August. So, as we move into autumn, can we expect to see more of the same? The big change this autumn is that Stamp Duty thresholds will return to normal on 1 October. This means that buyers will pay Stamp Duty on properties worth £125,001 or more. While some may be concerned that this could lead to a big drop in house prices, other factors are still in place that should prevent prices from falling off a cliff edge. Market sentiment still remains positive. In fact, buyer demand has remained strong, particularly for smaller properties. This has led some market experts to forecast an ‘autumn bounce’ in prices. The supply of houses remains low and if there is low supply and high demand, house prices inevitably go up. There is also the fact that mortgage providers have relaxed their lending rules. There are a lot more low-rate mortgages available. In some cases, lenders are considering borrowers’ overtime and bonuses as income again. While we are unlikely to see house prices climb as high as they did in the middle of the year, it’s also unlikely that there will be a sudden drop. A shortage in supply, high demand from first-time buyers and second steppers, and increased mortgage availability will all support the market. So house prices are likely to continue to move upwards, just not at the record pace we have seen so far this year.

Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. The FCA does not regulate tax advice. This newsletter is provided strictly for general consideration only and is based on our understanding of law and HM Revenue & Customs practice as of September 2021 and the contents of the Finance Bill. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.