Compared to August, the number of homes that changed hands rose by 67.5 per cent in September to 160,950.

This created the third spike in property transactions for the year, after June and March.

Year-on-year HMRC’s property transaction data showed that September’s activity, which netted the government £1.3bn in taxes, was 68 per cent up on the same period last year.

The stamp duty holiday offered buyers the chance to pay no stamp duty on the first £500,000 of their property purchase between July 2020 and 30 June 2021 which meant a saving of up to £15,000.

When the incentive was revealed, Chancellor Rishi Sunak said it would end in March causing the first spike in property transactions. The deadline was extended until the end of June driving transactions up to 198,240, their highest point since records began. A reduced tax incentive was left in place until the end of September offering buyers the opportunity to save up to £2,500 in stamp duty.

Overall, the stamp duty holiday has generated £13.5bn in revenue for the tax man between July 2020 and the end of September 2021, according to analysis by Coventry Building Society.

Karen Noye, mortgage expert at Quilter, said: “Considering the saving available to home buyers was a maximum of £2,500, it is somewhat surprising that so many rushed to buy while house prices remain so inflated.”

The Land Registry’s latest house price data showed that prices rose 9.8 per cent annually in August increasing the average property value to £280,921.

Noye added: “As Covid-19 cases are beginning to rise and the prospect of restrictions being reinstated increases, the number of people willing to move home may well start to drop as we head into winter. With the stamp duty holiday now officially drawn to a close time will tell whether the property market will return to some semblance of normal.”

Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “The fact we saw a surge at all shows the psychological power of the tax break. For those who had been locked in an incredibly frustrating housing market for months and may have initially been aiming for one of the earlier deadlines, this was a final chance to at least get a small saving on the painful and expensive process of buying a house.

“We expect to see sales slow from this point, reflecting the fact that agents reported a drop in buyer interest in August and a levelling off in September. We’ve also seen six successive months of drops in the number of properties coming to the market, so even if there were plenty of keen buyers, the property drought would keep a lid on sales.

“However, we’re not expecting the market to come to a shuddering halt, because people are still reassessing how and where they want to live, and while mortgages are gradually becoming more expensive, they’re still at low enough levels to support activity in the market.”

Data from equity release adviser Key showed over the past six months property owned outright by over-65s has increased in value by £24.2bn, or £4,833 for each older homeowner.

Their total property wealth now stands at £1.256 trn with all parts of Great Britain benefiting apart from London, where property values fell as people looked to leave the capital and central London house prices underperformed. The biggest gains in the past six months were in Scotland and the South East with over-65s gaining more than £13,000 and nearly £12,000 respectively.

Property gains beat income growth

Since Key started analysing the mortgage-free property wealth of the over-65s in 2010, homeowners have seen growth of 61 per cent – a total of more than £476bn which is equivalent to around £95,000 per household over the past 11 years.

Most government data shows average weekly pensioner incomes after housing costs only rising £12 to £331 – the equivalent of 3.7 per cent – over the last 11 years.  Pensioner couples have average incomes of £482 which is 6.8 per cent higher than 11 years ago while single pensioners’ average incomes are 4.5 per cent higher at £231.

Will Hale (pictured) CEO at Key said: “The recent end of the stamp duty holiday may cool the property market somewhat but over-65s homeowners will continue to have a substantial amount of wealth tied up in their houses.

“The 61 per cent rise in the property wealth of over-65s over the past 11 years dwarfs single digit increases in average pensioner incomes over that period and underlines the case for advisers and customers considering all assets when looking at financial planning at and through retirement.”

London misses out

The only region to see property values drop in the past six months was London where average prices are around £6,647 lower. All other regions saw growth of at least £1,000.  More than a fifth of all property wealth held by over-65s is in the South East, with the South West and East Anglia seeing the next biggest rises.

According to Rightmove’s house price index for October, this is the highest monthly rise at this time of year since October 2015.

The strong activity was partially driven by fast turnover of properties for sales and a “window of opportunity” before a potential interest rate rise later this year. This overcame a possible slowdown from the expiry of stamp duty incentives.

The report added that number of new sales being agreed was up 15.2 per cent in September but said that high demand was stalling recovery in depleted available stock.

It said that although number of new properties coming to market was higher than in the summer, stock levels were still an issue for the market.

According to the report, this imbalance provides an opportunity for owners to sell and cash out if they are downsizing or if they do not need to buy another property.

Tim Bannister, Rightmove’s director of property data said: “2021 has been the year of the power buyer, with those in the most powerful position to proceed quickly and with most certainty ruling the roost over other buyers who have to sell but have yet to come to market.

He added that one agent analysis showed that 87 per cent of their sales were to buyers who were ready to proceed was “typical” for many agents.

“Buyers being able to prove they are mortgage-ready or have cash in the bank helps them get up the pecking order. Whilst available stock for sale is still close to record lows, there are signs that this has stopped falling and stabilised this month, so fresh new choice is slowly growing,” he added.

He continued that as the end of the year approached many prospective buyers would be focusing on a having a normal Christmas so more “determined buyers” who sold their property could “act fast and buy with less competition.”

Managing director of Barrows and Forrester, James Forrester, said that the market had shown an “incredibly strong performance” despite the rollback of the stamp duty holiday.

He said: “We’re now seeing definitive proof that while the stamp duty holiday may have acted as a starting pistol where the property market revival was concerned, the race certainly hasn’t been run and this strong upward growth is unlikely to dissipate anytime soon.

“While it seems too soon to talk about Christmas, it won’t be long before it arrives and while many will be eyeing the New Year with regard to selling their home, now is the time to get your house in order so that come the 1 January you’re on the market and attracting interest.”

Director of Benham and Reeves, Marc von Grundherr, said the market was now seeing a second wave of activity as buyers avoiding “chaotic market conditions” of the past year entered the space.

He said: “With the market remaining particularly buoyant, those entering with a property to sell are pricing high and this has caused yet further growth where asking prices are concerned. While initial asking price expectations are perhaps a little over-optimistic, to say the least, a lack of stock to satisfy demand means that homes are selling fast and for a very good price.

“Full house” market conditions

The report said that all-time record highs were recorded in all regions and three UK sectors of first-time buyers, second stepper and top of the ladder.

The report said that the national average asking price for a first-time buyer went up by 0.8 per cent to £210,672 in October.

For second steppers it increased by 1.4 per cent to £315,386, whilst top of the ladder improved by 1.7 per cent to £630,819.

Regionally, the biggest monthly change in house prices was in the North West, which increased by 2.3 per cent to £232,639.

Wales also reported a 2.3 per cent monthly change, with average prices of £237,830.

In London and the South West, the monthly change was pegged at 1.9 per cent, bringing average house prices to £650,683 and £359,906 respectively.

The lowest monthly change was in the East of England, where the monthly price change was 0.1 per cent and average house price was £396,232.

Bannister said that these full house conditions were an “extremely rate event”.

Von Grundherr said: “We’re certainly starting to see stronger signs of a London market revival. House price growth across the capital has remained fairly muted in contrast to the rest of the nation but a return to the workplace and the return of foreign interest is starting to drive the market forward.

“Don’t be surprised to see London regain the property price growth top spot before the year is out.”

According to figures from Paragon, new BTL purchases by this group made up 5.08 per cent of total BTL purchases in the 12 months up to June, which is up from 4.72 per cent in the same period the year before.

This was the largest increase of any age group, with BTL purchases from landlords aged between 40 and 44 pegged at 49 per cent, which was followed by those aged 55 to 59 at 45 per cent.

The weakest growth was reported in the 65 plus category, which grew by 26 per cent.

Purchases from the 60 to 64-year-old bracket is the second smallest category after 65 plus which made up 3.38 per cent of total BTL purchases, but the increase is significant.

Richard Rowntree (pictured), Paragon Bank’s managing director, said: “There could be many contributing reasons for this trend, with low returns from savings and stock market volatility being a potential factor as this demographic seeks to boost retirement income.”

He added: “The pandemic may have also led to an increase in people around this age deciding to either take redundancy or early retirement, which would have given them potential access to a lump sum of money to invest, or they are simply experienced landlords who took advantage of the stamp duty holiday to lower their purchasing costs. Of course, sadly, inheritance can also result in a one-off cash boost.”

The research also showed that BTL purchases grew in all age groups by more than a third, barring the 65 plus category.

Richard Rowntree added: “While there was a sharp increase in older landlords purchasing new homes, it was also encouraging to see the majority of purchases in terms of absolute numbers being made by those aged between 35 and 50. This suggests that there’s a strong pipeline of younger landlords growing portfolios.”

According to Nationwide’s house price index, average house prices increased slightly month-on-month by 0.1 per cent, which is down from the two per cent monthly rise in August.

The average house price fell slightly from £248,857 in August to £248,742 in September.

According to Nationwide’s chief economist Robert Gardner house prices are 13 per cent higher than before the pandemic in early 2020.

The report added that on a regional level it was a “mixed picture” with Wales, Northern Ireland and Scotland reporting price acceleration whilst most English regions recorded a slowdown.

Wales recorded the strongest annual growth in the third quarter at 15.3 per cent, while Northern Ireland increased 14.3 per cent and Scotland was up 11.6 per cent.

England’s annual house price growth slowed to 8.5 per cent in Q3 from 9.9 per cent in Q2. Yorkshire and the Humberside reported the strongest growth at 12.3 per cent year-on-year, followed by North West with an 11.4 per cent rise over the same period.

London’s annual growth slowed to 4.2 per cent from 7.3 per cent last quarter. The surrounding outer metropolitan region, which includes Luton, Watford, Sevenoaks and Woking, also softened to 6.8 per cent in the third quarter from 8.2 per cent in the second quarter.

MT Finance’s director Tomer Aboody said that despite the annual dip in house price growth, prices were significantly higher than before the pandemic which put the “slowdown in perspective”.

He added: “Although some regions have seen a stronger increase in values, such as Wales, Northern Ireland and some parts of England, these have historically been at a lower pricing point than other regions where growth has been slower.

“Any rise is therefore more visible and significant, although historically this could also be reflected in a declining market, where potentially ‘non-prime’ areas are the first and biggest fallers in percentage points.”

Affordability becoming more “stretched”

Gardner said that as house prices continued to rise affordability was more challenging, especially for first-time buyers.

He said that a 20 per cent deposit on a first-time buyer home was around 113 per cent of gross income, a record high.

Gardner added that in 10 out of 13 UK regions, the ratio between typical mortgage payments and home pay was above the long-run average. This compares to before the pandemic when only one region, London, was above the long-run average.

He said: “Recent price patterns suggest an element of rebalancing is occurring where most of the regions that have seen the strongest price growth are those in which affordability is still close to or below the long-run average.”

SPI Capital’s chief executive Anna Clare Harper said competition for customers was high and with banks offering mortgages of up to 100 per cent and around 3,000 products available it was “no surprise that affordability is becoming stretched”.

She added: “For those considering their next property purchase, it’s important to remember one thing: just because you can borrow to acquire property with a low deposit, or at an initially low interest rate, it doesn’t mean you should. Both capital and interest repayments must be paid.

“That said, with rising construction costs, it’s likely that the UK continues to suffer from a shortage of housing stock, which in turn means prices are expected to continue to grow.”

Housing outlook

Gardner said that the outlook towards the end of the year “remains uncertain” but activity would likely dampen for a period after the stamp duty holiday ended in September.

He added: “Moreover, underlying demand is likely to soften around the turn of the year if unemployment rises as government support winds down, as seems likely.

“But this is far from assured. The labour market has remained remarkably resilient to date and, even if it does weaken, there is scope for shifts in housing preferences as a result of the pandemic – such as wanting more space or to relocate – to continue to support activity for some time yet.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said the stamp duty concession had brought forward home buying decisions, so prices were not rising as rapidly as it came to an end.

He said: “However, these figures also confirm what we are seeing on the ground, that there is still plenty of life left in the market – in fact, many prefer buying and selling in a less frenzied atmosphere – underpinned by a continuing shortage of stock, particularly of three and four-bedroom family houses.

“Looking forward, we don’t expect to see major changes although the increase in supply is helping to moderate prices further and bring more balance to the market.”

Scott Hendry, auction finance director at Together said: “We’ve seen a noticeable rise in property investors flipping property. Whether it’s an unusual property or in disrepair or you’ve got a very tight deadline, securing a bridging loan against the property for up to 12 months might be useful.

“This would allow you to complete the work they need to do and exit the short-term loan by selling the property – with investors expecting returns of up to 20 per cent on the most successful renovations.”

Bridging loans on the rise

Seeking the correct advice

Brokers said it was important for investors to get the right advice when flipping to make sure they were not left with a half-finished job and no exit.

Analysis by equity release adviser Key shows older homeowners have given nearly £1m a day for house deposits using equity release plans since the stamp duty holiday started last summer.

Chancellor Rishi Sunak announced in July 2020 that no stamp duty would be due on homes worth up to £500,000 as a way of helping those struggling financially during the pandemic.

The threshold was reduced in July to £250,000 and will revert to the original £125,000 from 30 September.

After this date, first-time buyers will continue to pay no stamp duty on the first £300,000 of homes worth less than £500,000.

The Key data shows pay-outs for house deposits peaked in June this year at £40.838m as the £500,000 nil rate ended.

The second biggest month was September 2020 when gifts totalled £40.622m.

They hit a low of £13.16m in February in the run-up to the original deadline of 31 March for the stamp duty holiday before it was extended in the Budget.

So far this month, £16,099m has been gifted by the Bank of Grandma and Grandad.

The average gifted for house deposits each month during the near 15 months of the stamp duty holiday so far is around £29m or £56,000 per person, according to the figures.

Will Hale, chief executive at Key, said: “Over a 19-month period, more than £437m worth of housing equity has been ‘recycled’ – moving from one generation to another to support their housing ambitions.

“While the stamp duty holiday helped to supercharge the older generations’ desire and ability to get children and grandchildren on the property ladder, the end of this incentive is unlikely to dim this appetite.

“Homeownership remains an ambition for many people – one that over-55s are eager to support – so all the signs suggest that many first time buyers will still benefit from older relatives’ generosity as well as no stamp duty on properties worth less than £300,000.”

Figures from HMRC showed this was also up by a fifth on the number of residential transactions completed in August last year. 

Despite predictions that the tapering of the stamp duty holiday would subdue activity, brokers said low rates along with continued lack of supply and desire for more space would sustain business. 

Richard Pike, Phoebus Software sales and marketing director, said: “Without the full financial incentive of the stamp duty holiday the housing market continues to return to a more normal level of activity. However, demand is still outweighing supply and we are seeing that even with greater freedoms being afforded to us, the race for space is ongoing. 

“Even if the stamp duty holiday is almost over, additional financial incentives have recently been presented to homebuyers in the UK. Last week, the lowest ever mortgage rate in Britain was launched at a mere 0.79 per cent, meaning those who are in a strong enough position to take out a mortgage can enjoy low rates as lenders embark on a rate war.”  

Residential transactions plummeted by 63 per cent to 73,740 in July as buyers withdrew from the market once the incentive of a tax-free property purchase up to £500,000 was removed. 

However, Mike Scott, chief analyst at estate agency Yopa, said another wave of demand was expected to occur soon ahead of the final tapering of the tax break, which removes the levy for purchases up to £250,000. 

He said: “Yopa expects another surge in the number of completed sales in September, as people rush to beat the final deadline for saving up to £2,500 of stamp duty in England and Northern Ireland, followed by another brief dip in October and then a return to a more normal, but still very active, housing market.” 

Meanwhile, Mark Harris, chief executive of SPF Private Clients, said activity in October would be more of a “step edge” than a cliff edge.  

“With listings picking up and the cost of finance across the loan to value spectrum continuing to fall, business is brisk and likely to remain so for a while yet,” he added. 

According to data from HMRC, this was £2.6bn more than the receipts for July last year. 

The department said the high income was down to the general rise in transactions during the stamp duty holiday as well as the 14-day payment window which meant transactions completed in late June were not settled until early July. 

In July, residential transactions rose 4.2 per cent annually to 73,740. This was a 63 per cent fall compared to June when there were 198,240 residential transactions completed.  

June’s activity was more than double that of the same month in the previous year, likely due to the tapering of the stamp duty holiday which saw the threshold for the tax relief lowered from £500,000 to £250,000 from 1 July. 

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “This data shows the enormous impact the pandemic continues to have. Total tax receipts were up £84.7bn compared to a year before, though this is largely down to deferment measures put in place to help individuals and businesses through difficult times. 

“A strong housing market saw stamp duty surge to ever higher levels as buyers tried to get their transactions over the line before the stamp duty holiday relaxed in early July. Whether we will see housing market activity drop in the coming months, only time will tell.” 

The number of mortgage applications via intermediaries rose from 77.5 per cent to 90 per cent over the last year.

Driven by the restrictions placed on the industry throughout the pandemic, lenders have focused on system modernisation, process efficiency and digitisation.

The survey, now in its 10th year, also found significant variation in application to offer timescales, with averages ranging from 14 days to 32 days across the lenders surveyed.

Iress’ head of business development, Steve Carruthers (pictured) said: “Since the last survey, few of us would have imagined the industry would go on to experience record lending volumes in 2021. A continued low interest rate environment, changing preferences amongst UK house buyers, the extended stamp duty holiday and the government’s 95 per cent LTV guarantee scheme did much to restore confidence in mortgage lending and borrowing.

“It brought much change and new challenges for lenders – but the need to process business efficiently has not changed; whether because of the volatile volumes, the evolving requirements of borrowers, the risk appetites of lenders, or how applications need to be processed. Our report shows true evolution across all parts of the industry at a time when efficiency and agility is more critical than ever.”

The survey also revealed that open banking is dropping down the priority list for many lenders and retention rates are stronger among the high street lenders and building society sector than for challenger banks and specialist lenders.