UK property sales are slowing ahead of the end of the stamp duty holiday in March, according to one of the UK’s biggest housebuilders.
Persimmon said on Wednesday that its weekly sales had settled to a “more normalised level from the elevated rate seen over the summer months”.
Housebuilders reported a surge in sales after the government announced in July that stamp duty would be temporarily cut to zero for properties worth up to £500,000. The release of pent-up demand when restrictions on the housing market were lifted in May also boosted the market.
The stamp duty holiday is set to come to an end on March 31. Sales must be completed by that date to be eligible, meaning that many purchases begun now will not be finished in time.
The tax break is one of the main reasons for a sharp rise in sales and prices last year and there are signs elsewhere that this momentum is petering out.
The Halifax house price index showed average UK prices increased 0.2 per cent in December compared with the previous month, down from a 1 per cent increase the previous month, and below expectations.
Increased demand because of the stamp duty holiday meant Persimmon had a forward sales pipeline of £1.7bn as of December 31, 25 per cent higher than at the same point a year earlier. However group revenues were £3.33bn in 2020, down from £3.65bn a year earlier.
Shares in Persimmon fell 2 per cent in morning trading to £27.30, 17 per cent below pre-pandemic levels.
In addition to the end of the stamp duty holiday, a resurgence in coronavirus cases and changes to the government’s Help to Buy subsidy scheme — which will impose regional price caps and will limit it to first-time buyers — had slowed trade, said Persimmon.
“Recent events have served to further demonstrate the continuing near-term uncertainties arising from the Covid-19 pandemic,” said chief executive Dean Finch. “However, we believe that the longer-term fundamentals of the UK housing market remain resilient.”
The government has supported the market during the pandemic, with chancellor Rishi Sunak fiercely resisting any tightening of the lockdown in sectors such as housing and construction even as the national coronavirus caseload worsens.
Winkworth, the estate agency, said on Wednesday it was “relieved that estate agencies are to remain open for business during the current lockdown,” citing a record number of sales to complete in the first quarter. The company said that its 2020 revenues would be flat compared with 2019, and that pre-tax profits would be lower.
Not all buyers have been put off by the impending end of the stamp duty holiday, according to Greg Fitzgerald, chief executive of housebuilder Vistry Group.
The company sold more homes in the first 10 days of the year than the equivalent period of 2020, even though most people agreeing to buy since December would have done so in the knowledge they would miss out on the tax break, said Mr Fitzgerald.