The market is in a strange place at the moment, as Sarah Coles of Hargreaves Lansdown highlighted last week.
It seems the desperation to beat the stamp duty holiday deadline could be causing people to panic buy, as competition drives investors and owner-occupiers to make increasingly high offers.
Arguably this is already filtering through to average house prices, as inflation surged to 7.5% in October, according to the Halifax house price index.
People are also paying more for their mortgages, with Halifax, TSB, Nationwide, NatWest, Barclays, as well as Yorkshire and Chelsea building societies being some lenders to increase their rates.
Indeed, the average 2-year fix to 85% LTV has gone up by more than an entire percent between July and November this year, from 2.11% to 3.12%, data from Moneyfacts shows.
With this in mind, we have to urge caution. There’s no point in saving £15,000 on stamp duty if you pay over the odds to buy a property.
It’s important to remember that it’s quite likely buyer activity will slump once this reduced stamp duty period is over, which could filter through to lower house prices.
For those who remember how it was before the stamp duty surcharge came into force at the end of March 31st 2016, we may see something similar in the next six months.
People will try their best to force deals through before the stamp duty holiday deadline of 31st March, after which the market will be in a cooling off period.
The only question is whether the government decides to extend the incentive, or eliminate the hard deadline for completions, seeing as the homebuying process is running so slowly at the moment.
Only time will tell.
Ryan Bembridge, Editor, PropertyWire
