Anybody pulling out of a house purchase as they would no longer benefit from a stamp duty saving would be highly likely to pay even more on the purchase of the next home a couple of months later, as house prices continue to escalate.
It became apparent that even before the stamp duty holiday ended, market demand was no longer fuelled by these savings, but instead by a more powerful long-term driver. Decisions on property purchases are being based upon lifestyle choices.
A growing number of people are no longer working full time in the office, and there is a question mark over whether hybrid working will become the normal working pattern.
This has resulted in increased demand for homes with more space, such as an office or a garden. A lot of people have decided to move out of cities and relocate, with some going back to their home towns.
The significance of lifestyle choices became apparent after June 2021, when the biggest stamp duty saving finished.
People who had missed out on this went ahead with purchases regardless, because they were a looking at a bigger picture of a long-term future in their dream home and, with tapered relief until September, people still benefited from a saving – albeit a smaller one.
While they would have preferred not to pay that extra tax, they were prepared to do it because for them it was not just about cost saving, but about lifestyle.
Looking at the past year overall, we have also not noted a significant increase in the number of failed transactions, which could have indicated a lack of confidence in the market.
Levels are at where they would have been prior to the outbreak of the pandemic. Typically reasons for transactions falling through have not been not related to Covid-19 but are the same reasons as usual.
These include people deciding that they do not want to go ahead with a purchase because they actually want to stay where they are, and do not want to sell their house after all.
With the shortage of housing stock there was also a noticeable increase in the numbers of people extending or improving their properties instead.
Strong remortgage market
Although the residential property market in 2022 looks set to be at a more normalised pre-2020 position without the high transactional volumes of 2021, the indications are that there will be a very strong remortgage market.
This will partly be because of heightened activity driven by concerns around interest rate rises, and is particularly likely to be the case in the first half of the year.