Homeowners not worried about market cliff edge... But won’t sell if house prices dip

Preparing for a market dip

Despite the Government staggering the deadline of the extended stamp duty holiday, a removal of the incentive is expected to cause transaction numbers to plummet, bringing property price growth along with it.

Despite this, our research this week shows that just 14% of homeowners are worried about the value of their property falling when the current stamp duty holiday does expire.

Last week, the latest Halifax House Price Index revealed that house prices have hit record highs in March, up 6.5% on last year alone. Hardly surprising then, that 67% of homeowners also stated that they think current house prices are too high (with the average buyer now paying nearly £255,000 to get on the ladder).

Homeowners won't sell if prices fall from this peak

However, having done the hard work of saving a deposit and tackling the often lengthy, uncertain and stressful property transaction process (there's no "sell house fast" in the ordinary property market), the majority of homeowners understandably want to realise the full potential value of their investment.

We found that 68% of homeowners would actually refrain from selling their home in the future if it was worth less than the current market value. This suggests that should the market tumble over the cliff edge come September, a drop in property values could cause the cogs of the UK property market to stop turning.

UK Homeowners: A split personality

Matthew Cooper, Founder & Managing Director of Yes Homebuyers, commented:

“It’s interesting to see the split personality of homeowners when it comes to property and their feelings towards it as both an aspirational achievement, and as an investment asset.

On the one hand, homeowners remain undeterred about any short-term market decline as many have invested in their home with a long-term view. They generally realise the property market is cyclical in nature, so while house prices have gone up, they will inevitably come down, but in the long run, they’re likely to see an increase in value.

However, when it comes to selling and actually securing a return on their investment, they’re unlikely to do so at a loss unless they absolutely need to move.

This suggests that while homeowners are generally unphased by a potential cliff edge, we could see market activity dry up should the market topple over come September.

With the Government artificially fuelling the market to such a heightened level for over a year now, we are undoubtedly going to see a bumpy landing when the stamp duty holiday finally does end. The question is, to what extent will this impact the market?”