House Price Recovery
By July 2020, short-term drops in property prices had come to an end, with a ‘surprise’ 1.6% rise in house prices. This meant that the annual rate of growth for the UK market in 2020 had grown to 3.8%, which is higher than the 1% growth that Savills originally predicted at the start of the year. This rise in property values and market activity was fuelled not only by the reopening of the property market, but also the introduction of a new stamp duty tax holiday.
The stamp duty tax holiday, announced by Rishi Sunak in July, meant that homeowners and buy to let investors were able to benefit from significant tax savings. The tax threshold for those buying a buy to live home became much higher than usual, allowing anyone purchasing a property worth less than £500,000 to avoid stamp duty tax altogether. For buy to let investments, investors will need to pay 3% tax on property with a value up to the same amount.
This price growth continued into August with record highs, and by October, prices were 5.5% higher than they were a year ago. This marked the biggest increase in property prices for over four years, and restored a lot of faith in the market moving forward and encouraged more optimistic house price predictions for 2021.