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Where the wheels are coming off the house price boom

·4-min read
In Toxteth, Liverpool, buyer demand has fallen just as supply has risen - Alamy
In Toxteth, Liverpool, buyer demand has fallen just as supply has risen - Alamy

Record house price growth has dominated property market headlines in the last year, but in a smattering of neighbourhoods the first cracks in the market are already starting to show.

The stamp duty holiday savings that artificially inflated the market have disappeared for good just as the furlough scheme ended and rising inflation put a further strain on families’ finances.

Now markets in several areas of the North and Midlands have become strained, with supply rising just as demand is falling. There are fears this could soon spread across the country.

In Toxteth, Liverpool new listings in August rose by 113pc compared to August 2020, according to property website Rightmove. At the same time, agreed sales fell 33pc year-on-year. Elsewhere in Merseyside, in Prescot, new listings jumped 20pc while demand fell by 41pc.

Kirsty Roberts of Entwistle Green estate agents in Allerton, which covers Toxteth, has recently listed two houses above the £500,000 mark which have attracted far less interest than previously. “One of them has four viewings booked, which is fine, but a few months ago it would have been 20,” said Ms Roberts.

Just as demand has calmed down, supply has started to rise.

“Valuations have probably doubled compared to most months this year. Normally I would do two or three a day, now I am doing five or six,” she said.

“A lot of people are worried about their jobs and finances, or they are separating from their partners. For most, it’s not a move by choice. By the end of this week I will have listed 11 homes, normally it would be six.”

Ms Roberts added: “I have a couple of sellers who are moving because they have seen that they can get a good price. But I have another who can’t afford their mortgage and is going to move back in with their mum.”

Changing market

The end of the stamp duty holiday has been key for buyers. The tax break particularly fired up the top end of the market. “Before Christmas last year it was so, so crazy for everything worth £500,000 upwards,” said Ms Roberts.

But what the Chancellor gave, he had to take away. The stamp duty holiday ended for good on September 30. In the lower and mid-level parts of the market, below £250,000, where homes were unaffected by the tax break, competition is still fierce, said Ms Roberts. “But anything above £250,000 has slowed down.”

In the wake of the first lockdown, Toxteth’s popularity boomed with buyers moving from more expensive locations such as Manchester, who accounted for 40pc of residential movers, said Ms Roberts.

Demand from this group has cooled as the tax break was withdrawn, and workers have started to return to their offices more frequently.

Four of the other pockets that have seen the biggest shifts in supply and demand are in the Midlands. In Holbeach, in Spalding, Lincolnshire, new listings jumped 32pc year-on-year in August while demand fell by 54pc.

In Stechford, in Birmingham, listings rose by 54pc while demand fell by 29pc.

Amee Chadwick, of Burchell Edwards estate agents’ local Castle Bromwich office, said: “Now the stamp duty holiday has ended the market has slowly quietened down.” Inquiries have dropped 50pc, she said.

In part, this is because the market has been a victim of its own success. First-time buyers have been bidding competitively and paying asking prices in full, said Ms Chadwick.

Values have jumped by between 7pc and 12pc. In turn, this has priced out investors, who can no longer achieve the yields they want. Their local market share has halved from 40pc to 20pc.

In Toxteth, landlords have similarly been spooked. Ms Roberts noted a two-bedroom house in Dingle, which shares Toxteth’s L8 postcode. “The most those properties have ever gone for is £110,000. The owner listed at £125,000. He has two offers at £160,000. It’s unheard of,” she said.

Wales accounted for another two of the top 10. In Ferndale, in Rhondda Cynon Taff, listings jumped by 58pc while demand fell by 8pc. In Caernarfon, in Gwynedd, agreed sales jumped 38pc, but this was far outpaced by a doubling of supply.

Aberdeen in Scotland, a property market that is heavily dependent on the oil industry and has been depressed since the oil price crash in 2014, new listings rose by 11pc while agreed sales dropped by 23pc.

Are you concerned house prices could fall? Leave your thoughts in the comments section below

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