UK house prices drop amid rush to beat deadline for tax break

London

UK home prices fell in January as sellers tried to speed up transactions with discounts before a temporary reduction in a hefty tax on home-buying ends - although many deals will miss the deadline anyway, according to Rightmove.

The average asking price fell 0.9 per cent on the month, seemingly to tempt movers into last-minute sales, the UK's biggest property website said.

However, of 613,000 agreements already in the pipeline, it expects about 100,000 to close after the March 31 cut-off, meaning they will face tax bills as much as £15,000 (S$27,000) bigger than they would have.

While activity in the first few weeks of January usually sets the tone for the rest of the year, Covid-related market closures and the stimulus-boosting stamp duty holiday are likely to skew the figures in 2021.

Tim Bannister, Rightmove's director of property data, said the main difference between Britain's first lockdown last year and the one it's in now was that the housing market was open this time, so that "changed housing priorities can therefore be more readily satisfied."

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As more people work remotely and home-school their children, they've sought homes with more space - indoor and outdoor - lifting the market after the initial shock of the pandemic despite the biggest economic slump in three centuries.

The number of agreed sales last year was up a tenth on 2019.

Matthew Smith, sales and lettings director at Thornley Groves, Manchester, said the desire to upsize to the suburbs is the main driver of sales.

"I don't think the high levels of activity we're currently seeing are exclusively due to the tax holiday," he said. "It's simply given people the impetus to be alert to moving home, which in turn has led to more demand." BLOOMBERG