UK house prices fell in August amid a drop in demand for bigger homes after the government scaled back its stamp duty tax break for buyers in England and Northern Ireland this summer, according to Rightmove.
The property website said the national average asking price of a home had fallen by 0.3%, or about £1,000, over the past month, and now stood at £337,371. However, it said buyer demand remained strong for smaller properties in particular, and that it was predicting an “autumn bounce” in prices.
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In a further sign of the housing market cooling after the government changed its stamp duty rules earlier this summer, bringing to an end a boom in property values as buyers scrambled to take advantage of the tax break, the figures come after the Nationwide building society said house prices fell by 0.5% in July. Rival lender Halifax said prices rose by 0.4% in July, but predicted a drop in house prices over the coming months.
The government took the first steps in July to scale back its stamp duty holiday for property buyers in England and Northern Ireland, which was first launched by the chancellor, Rishi Sunak, last year to ward off a collapse in the housing market during the first Covid lockdown.
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Buyers paid no stamp duty on the first £500,000 of the purchase price before 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 purchase homes costing up to £300,000 without incurring stamp duty from 1 July. A similar tax break in Scotland and Wales has ended.
Rightmove said its headline findings masked wide variations between different types of property.
It said the overall monthly fall was driven by a 0.8% drop in average prices for homes with four bedrooms or more. With buyers no longer able to make large stamp duty savings, it said the typical asking price was down by £4,699.
By contrast, it said smaller properties sought by first-time buyers and families looking to move to their second home continued to rise in value to record levels.
Tim Bannister, Rightmove’s director of property data, said: “Average prices have only fallen in the upper-end sector, which is usually more affected by seasonal factors such as the summer holidays and has also seen the greatest withdrawal of stamp duty incentives. The mass market of properties that cater for first-time buyers and second steppers is still seeing high demand and upwards price pressure, leading to new record high average prices in those sectors.”
