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Benham & Reeves Market Index Q1 2021

Home sellers overpriced by 21% in Q1 despite cooling market ahead of the original stamp duty deadline

To view the full Market Index Q1 2021 click here.

The latest summary of property market health from leading lettings and sales agent, Benham and Reeves, has revealed that house price growth stuttered in the run up to the original stamp duty deadline in March of this year, climbing just 0.6% on the previous quarter.

This decline in market activity saw the gap between asking prices and sold prices fall to its lowest since the start of 2018, however, sellers continued to chance their arm, with actual sold prices still coming in -21% below their over optimistic asking price expectations.

The Benham and Reeves Market Index Review combines data from the top four house prices indices to give an overall view of market health based on buyer and seller expectations via mortgage and asking price data, as well as market performance where sold prices are concerned.

The UK

The latest index shows that during the first quarter of this year, house prices across the board averaged £269,0881 across the UK. This was 5.9% higher than the previous year, although the initial impending deadline of the stamp duty holiday clearly had an impact.

Since the introduction of the stamp duty holiday in Q2 of 2020, quarterly house price growth hit 2.8% and 2.2% in the following quarters respectively. However, this slowed to just 0.6% between the first quarter of this year and the final quarter of 2020.

Despite the original deadline looming, savvy sellers continued to overprice in order to take advantage of a buoyant buyer demand fuelled market. At £318,901, the average UK asking price in Q1 of 2021 was 32% higher than the average price at which buyers were having mortgages approved. The average UK home was also selling for £352,860 during Q1, a -20.7% reduction when compared to the average asking price.

London

London has seen a lower level of buyer hysteria fuelled by the stamp duty holiday. However, with an overall average price of £529,746 in the first quarter of this year, the Benham and Reeves index shows that property values actually fell by -0.6% when compared to Q4, 2020 although they did remain 2.6% higher than the previous year.

While sellers also remained over expectant, they weren’t over pricing their homes to the same degree seen across the wider UK market. With an average asking price of £616,808 across the capital in Q1, the average seller was entering the market 27.8% higher than the average price at which buyers were seeing a mortgage approved for (£482,576). With an average sold price of £499,446, homes were also selling for -19% less than the average asking price across the capital.

Director of Benham and Reeves, Marc von Grundherr, commented:

“It’s now clear that the UK property market started to retract in the run up to the original stamp duty holiday deadline, as previously high levels of buyer activity started to dissipate bringing a decline in the rate of house price growth. As a result, sellers did have to adjust their price expectations when compared to the previous quarter and this meant the gap between asking and sold prices was at its smallest in over three years. But despite this, they continued to overprice by a considerable margin in the hope of securing a better price than they may have otherwise.

With the government implementing a last gasp extension, there’s no doubting that the market has seen a fresh head of steam and so we can expect buoyant levels of house price growth to ensue over the second and third quarter of this year.

It will be interesting to see just what impact the new tapered deadlines have on the market and if either will spur a notable decline in market activity. Now that further insurance measures have been added in the way of 95% mortgages and a refreshed Help to Buy scheme, we could see the market continue to perform very strongly even once the stamp duty holiday clock has expired.”

Benham and Reeves House Price Index
UK
Year Quarter Average House Price Quarterly Change
2018 Q1 £245,074
Q2 £248,245 1.3%
Q3 £250,244 0.8%
Q4 £248,513 -0.7%
2019 Q1 £247,463 -0.4%
Q2 £251,682 1.7%
Q3 £252,487 0.3%
Q4 £251,914 -0.2%
2020 Q1 £253,983 0.8%
Q2 £254,776 0.3%
Q3 £261,845 2.8%
Q4 £267,492 2.2%
2021 Q1 £269,088 0.6%
Benham and Reeves House Price Index
London
Year Quarter Average House Price Quarterly Change
2018 Q1 £519,238
Q2 £520,412 0.2%
Q3 £517,059 -0.6%
Q4 £514,976 -0.4%
2019 Q1 £504,731 -2.0%
Q2 £512,193 1.5%
Q3 £513,180 0.2%
Q4 £511,166 -0.4%
2020 Q1 £516,489 1.0%
Q2 £521,516 1.0%
Q3 £530,395 1.7%
Q4 £532,744 0.4%
2021 Q1 £529,746 -0.6%
UK
Year Quarter Mortgage Approvals Price <Difference> Asking Price <Difference> Sold Price
2018 Q1 £218,231 37.8% £300,684 -25.4% £224,319
2018 Q2 £219,116 40.4% £307,745 -26.3% £226,869
2018 Q3 £221,959 37.4% £305,060 -24.1% £231,438
2018 Q4 £220,522 37.1% £302,239 -23.8% £230,274
2019 Q1 £221,578 35.6% £300,481 -24.3% £227,608
2019 Q2 £225,987 36.2% £307,691 -25.5% £229,276
2019 Q3 £224,490 36.5% £306,321 -23.6% £234,074
2019 Q4 £225,188 34.6% £303,182 -22.8% £234,167
2020 Q1 £228,344 35.6% £309,611 -25.2% £231,743
2020 Q2 £228,511 36.5% £311,950 -25.6% £231,999
2020 Q3 £234,497 36.4% £319,919 -25.2% £239,308
2020 Q4 £240,495 33.8% £321,833 -23.2% £247,284
2021 Q1 £241,628 32.0% £318,901 -20.7% £252,860
London
Year Quarter Mortgage Approvals Price (Nationwide – London) <Difference> Asking Price <Difference> Sold Price
2018 Q1 £473,776 30.8% £619,905 -23.1% £476,653
2018 Q2 £468,845 34.0% £628,174 -23.8% £478,555
2018 Q3 £468,544 31.2% £614,537 -21.9% £480,090
2018 Q4 £466,988 31.5% £614,044 -22.4% £476,273
2019 Q1 £455,594 32.8% £605,178 -22.9% £466,356
2019 Q2 £465,722 32.7% £618,232 -24.5% £466,683
2019 Q3 £460,686 33.1% £612,967 -21.9% £478,594
2019 Q4 £458,363 32.9% £609,315 -21.5% £478,227
2020 Q1 £460,266 36.2% £626,687 -23.8% £477,665
2020 Q2 £475,448 31.9% £627,339 -24.2% £475,553
2020 Q3 £480,857 32.0% £634,773 -23.0% £488,838
2020 Q4 £486,562 29.2% £628,648 -21.4% £494,324
2021 Q1 £482,576 27.8% £616,808 -19.0% £499,446

Each house price point consists of an average of each month to form the quarter. Mortgage approval figures are sourced from Nationwide and Halifax, asking prices from Rightmove and sold prices from the Land Registry.

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About the Author

Established in 1958, Benham and Reeves is one of London’s oldest, independently owned property lettings and sales agents. With specialism in residential sales, corporate lettings and property management in prime areas of London, the company operates from eighteen prominently located branches and five international offices.

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