Homeowners warned that the house price boom will see them £10k worse off - despite stamp duty holiday savings

Fast house price growth is canceling out any financial benefit of the stamp duty reprieve in all but two UK cities

Anyone buying a home in 2021 is juggling the benefits of savings made thanks to the stamp duty holiday, now extended until the end of June, and the potential losses due to the soaring house prices. According to new research, the scales are not tipped in buyers' favour. There is now clear evidence that any savings from not having to pay stamp duty are being wiped out by the huge house price increases almost everywhere in the UK.

Related: The stamp duty holiday has been extended - Here's everything we know

House price growth outpaces stamp duty savings

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Research by Newcastle-based property developer, StripeHomes, has found that a hot housing market driven by the stamp duty holiday has seen the saving on offer canceled out by house price increases in all but two major cities. The analysis looks at house price growth since the introduction of the stamp duty holiday in July of last year across 18 major cities in England and how this compares with the saving on offer via the tax reprieve.

The research shows that back in July, the average house price in England average £253,441 meaning the stamp duty saved would have equated to £2,672. Today, the average house price across England sits at £266,532, an increase of £13,091. While homebuyers are still saving £3,327 in stamp duty due to the extended holiday deadline, it means they are paying £9,764 more to get on the ladder when compared to July last year.

The worst cities for house prices increases – and the two exceptions

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The simple truth is that it is considerably more expensive to buy a home this year than it was last year, even without any stamp duty payable. Oxford homebuyers are even worse off than the national average. Since the introduction of the stamp duty holiday, house prices have jumped by £40,972 to £442,448 today. Even with a stamp duty holiday saving of £12,122, homebuyers in the city are still paying £28,849 more on the average purchase.

In Manchester, homebuyers are paying £21,299 more than they were prior to the stamp duty holiday even after taking the current saving into account, while in Sheffield the cost of buying is up £18,700.Other cities where homebuyers are now worse off by more than £10,000 include Leeds (£15,928), Liverpool (£14,596), Bradford (£13,042), Bournemouth (£11,908) and Plymouth (£10,990).

In fact, the research shows buying now is better for homebuyers in just two major cities. In Southampton, house prices have climbed by just £42 since July of last year meaning homebuyers can still save £1,708 in stamp duty. In Cambridge, house prices have fallen by £7,349 since the introduction of the stamp duty holiday, meaning with the addition of a £11,853 tax saving, homebuyers are £19,201 better off buying now.

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Just as its critics had predicted, the stamp duty holiday has done more to stoke the housing market than help out buyers. Managing Director of StripeHomes, James Forrester, commented: 'Time and time again, we see poorly thought through Government initiatives designed to ''help’' homebuyers ironically push house prices further out of reach. The stamp duty holiday has done just that and while the average homebuyer might feel as though they’ve been given a helping hand with a few thousand pounds saved in tax, it’s nothing but smoke and mirrors by the Government.'

Related: Martin Lewis warns that the stamp duty holiday extension could end up costing homebuyers thousands

Forrester is critical of the extension, saying that it will only cause further price rises and more problems with affordability for buyers already struggling to find anywhere they can afford: 'with the holiday now running until September for many, we can expect house prices to continue to climb and many more homebuyers to be priced out of homeownership as a result.'

Anna Cottrell is Consumer Editor across Future's home brands. She moved to the world of interiors from academic research in the field of English Literature and photography. She is the author of London Writing of the 1930s and has a passion for contemporary home decor and gardening.