House prices have jumped by £57,000 across England and Wales as home-buyers rush to make stamp duty savings, according to analysis.
The stamp duty holiday introduced last July is set to end on March 31 – and the average stamp duty saving being made by home-movers is £11,566, according to Halifax.
But strong demand has added to the upward pressure on house prices, in many cases eclipsing the stamp duty savings that can be made.
In the first half of 2020, the average house price for home-movers was £373,537, Halifax found.
But, in the last six months of the year, the average property price was £57,790 higher, at £431,327 – an increase which equates to around five times the amount saved on stamp duty.
Stamp duty applies in England, while in Wales it was replaced by the land transaction tax.
The threshold at which stamp duty normally applies on home purchases is £125,000, but it was temporarily raised to £500,000. It will revert to £125,000 from April 1.
In Wales, a similar temporary holiday has been applied to the land transaction tax.
Andy Bickers, mortgages director, Halifax, said: “Since the summer we have seen a huge surge in mortgage applications, as people raced to make much-sought-after stamp duty savings.
“We know that lockdown restrictions have made it more practically challenging for those buying and selling, but the stamp duty holiday has been one of the main drivers of continued demand for sales and purchases during the pandemic and we will wait to see if further steps are taken that could give people more time.”
Halifax calculated that the proportion of home-movers paying stamp duty on transactions fell from more than nine in 10 (93%) in the six months to June 2020 to just over a quarter (26%) in the six months to December.
During the holiday period, around two-thirds (67%) of home-movers in London have paid stamp duty on their home purchase, followed by nearly four in 10 (39%) in the South East, Halifax estimates.
Higher house prices in these regions mean many buyers still need to pay some stamp duty, above the temporary £500,000 threshold.
The smallest proportions of home-movers still paying property taxes were in the North East of England, at 4%.
– Here are the percentages of home-movers paying stamp duty or the equivalent property tax in June 2020 compared with December 2020, according to Halifax (Its calculations for Wales are based on the land transaction tax which applies there, rather than stamp duty):
– North East, 74%, 4%
– Yorkshire and the Humber, 84%, 8%
– North West, 86%, 11%
– East Midlands, 93%, 10%
– West Midlands, 94%, 13%
– East Anglia, 98%, 19%
– Wales, 56%, 41%
– South West, 98%, 21%
– South East, 100%, 39%
– London, 100%, 67%