2021 on course to be strongest year for house purchases since at least 2007

This year is likely to be the strongest for home buying activity since at least 2007, according to a trade association representing mortgage lenders and other financial firms.

Home mover activity fell away somewhat following the ending of a recent stamp duty holiday, but has remained positive, with activity being strongest away from the South of England, UK Finance said.

It said that, provided there is not a full reversal of activity as the year draws to a close, “purchase activity in 2021 is likely to reach the highest level since 2007”.

The number of house purchases in 2006 was slightly higher than in 2007 – and UK Finance believes this year’s total may even potentially surpass 2007 levels and be the highest since 2006.

But with a few weeks still to go until the end of the year – and house purchase activity now less frenzied than it was earlier on in the year – the final outcome is not yet certain.

Home buyers rushed earlier on in the year to make the most of discounts offered under the stamp duty holiday in England and Northern Ireland, causing activity to bunch up. The holiday was tapered from July and ended completely in October.

Similar holidays had also taken place in Scotland and Wales.

UK Finance’s report said: “Following the unprecedented peak in lending in June, as borrowers rushed to complete house purchases before the end of the second phase of the stamp duty land tax holiday, activity levels dropped sharply.

“This pattern is a predictable and familiar one, with home buyers bringing purchases forward in order to save a significant sum of money in what is typically the largest single financial commitment they will make in their lifetime.

“However, the drop-off after the June deadline was significantly less pronounced than after previous stamp duty changes, as the third and final phase of the exemption remained in place until the end of September.”

Stamp duty is not the only factor which has been driving moves in 2021.

The report said that as employers have introduced more flexible working patterns, “home owners who were previously constrained by relatively low levels of equity with which to ‘staircase up’ the housing ladder within the city where they work can now do so in a different location where their existing equity will go further”.

Eric Leenders, managing director, personal finance at UK Finance, said: “Following the end of the furlough scheme and the stamp duty holiday, activity in 2022 will inevitably be weaker than this year but an improving labour market outlook gives cause for cautious optimism.

“However, there are downside risks, including from rising inflation, which have the potential to constrain activity.

“While our data shows that the vast majority of customers are managing their borrowing well, lenders continue to provide tailored forbearance and support to borrowers who need help.

“Anyone experiencing financial difficulty should contact their finance provider as soon as possible to discuss options available.”