Prices to continue rising as stamp duty holiday elapses

There is no doubt that demand cooled after the stamp duty discount was reduced. But a collapse in new listings has eclipsed the decline in new buyer demand, suggesting that prices will at least hold their ground in Q4 when stamp duty returns to normal. Moreover, with elevated household saving still supporting deposits, mortgage rates falling as competition between banks intensifies, and many households reassessing their homes in light of remote working we suspect demand will continue to surprise to the upside. Indeed, web search activity increased in September suggesting that the inevitable dip in transactions in Q4 will be short-lived. As a result, we expect house prices to rise by 10% y/y in Q4 2021 and by 5% in Q4 2022, above the consensus of 6% and 3.5% respectively.
Andrew Wishart Property Economist
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