The stamp duty cut has added £30,000 to an average property's asking price with sales up by 20 per cent as Britons battle to buy homes before the six-month holiday ends.
Between 27 March and 13 May, thousands more sales were made every week than before the coronavirus lockdown, according to Bank of England statistics.
It follows Chancellor Rishi Sunak raising the threshold on stamp duty last month from £125,000 to £500,000 for those buying homes in England and Northern Ireland until March 31 next year.
The move was part of the Chancellor's crucial Covid-19 recovery package, giving buyers a six-month 'holiday' from paying the charge on most homes in a bid to kickstart the market and aide the recovery of the UK economy.
Between 27 March and 13 May, thousands more sales were made every week than before the coronavirus lockdown, according to Bank of England statistics (file photo)
Data shows the rise has particularly affected the north of England and Wales, with central London being the only area where asking prices are falling.
But experts have warned the property market could crash towards the end of this year, with the current surge in sales possibly down to delays from lockdown and agreements made in advance of 2021.
Pablo Shah, a senior economist at the Centre for Economics and Business Research, told The Times: 'We anticipated a 6 per cent rise in property transactions as a result of the stamp duty cut.
'The figures we see here are probably this plus sales which were delayed as result of the lockdown and those that are being brought forward from next year.
What are the changes to stamp duty announced by Rishi Sunak?
From July 8 until March 31 2021, buyers in England and Northern Ireland will pay no stamp duty on the first £500,000 of their purchase when they move home.
The measure, which temporarily increases the 'nil rate' band of stamp duty from £125,000 to £500,000, will reduce the average stamp duty bill for a main home from £4,500 to zero. Buyers can potentially save up to £15,000.
If you buy a property over £500,000 amount, then you can still save money and can take off £15,000 what you would have paid prior to the announcement.
Buy-to let investors and people looking to purchase a second home will also benefit from the changes.
But it has also been suggested that some sellers may now be tempted to put their asking prices up due to the tax savings that buyers will be making.
Stamp duty applies in England and Northern Ireland and people usually pay the tax on homes priced above £125,000.
'The stamp duty cut is propping up the market this summer but it won't be sufficient to negate the effect of the end of the furlough scheme and mortgage payment deferrals later this year which is why we still believe that property prices will fall towards the end of the year and into next year.'
The stamp duty cut, which temporarily increases the 'nil rate' band of stamp duty from £125,000 to £500,000, will reduce the average stamp duty bill for a main home from £4,500 to zero.
It means buyers can potentially save up to £15,000.
If you buy a property over £500,000 amount, then you can still save money and can take off £15,000 what you would have paid prior to the announcement. Property experts said the step could encourage some 'missing movers' back to the market.
On the housing market, Mr Sunak said property transactions fell by 50 per cent in May and house prices had fallen for the first time in eight years.
Aneisha Beveridge, Head of Research at Hamptons International, earlier said: 'The introduction of the stamp duty holiday has given a further boost to the housing market which was already showing strong signs of recovery even before its introduction.
'The number of people looking to buy a home has risen across every region in Great Britain since the announcement, with Southern areas recording the biggest increase.
'It's in these regions, where house prices tend to be higher, that buyers stand to gain the most from the holiday.'
She added: 'But perhaps contrary to expectations, it's Northern markets which have performed most strongly.
'Price growth across the North has lagged significantly behind that of the South over the last decade, and with more capacity for prices to rise, perhaps this year will mark a turning point. It also demonstrates that there are longer-term factors influencing the market too.'
Homebuyers rushed online to look for their next home within half an hour of the Chancellor's immediate stamp duty cut.
Rightmove reported a 22 per cent jump in traffic to its site within 30 minutes of Rishi Sunak confirming the cut in his mini-Budget on July 8.
The property search website said the cut would produce savings of up to £15,000 in some regions of the country.
Everything you need to know about stamp duty
- What is stamp duty?
The Stamp Duty Land Tax was introduced in its current form in December 2013 and applies to people who buy a property or land over a certain price in England and Northern Ireland.
The previous threshold meant property costing over £125,000 is liable for the tax, although the 2017 Budget abolished stamp duty for first-time home buyers in England and Wales purchasing homes up to £300,000.
- What is the case elsewhere in the UK?
Wales and Scotland have their own arrangements.
Since the announcement, in Scotland the threshold for paying land and buildings transaction tax was raised from £145,000 to £250,000 from July 15 and in Wales it rose from £180,000 to £250,000 from July 27.
- What were the stamp duty rates before the July 8 announcement?
For first-time buyers, there was no tax on places costing up to £300,000 and 5% on the portion from £300,001 to £500,000.
For those who have purchased a house before, it is a sliding scale and people pay on the portion of the property price which falls within each band.
The bands are: 2% on properties costing £125,001-£250,000, 5% on £250,001-£925,000, 10% on £925,001-£1.5 million, and 12% on any value above £1.5 million.
Buyers of second homes - whether buy-to-let or holiday homes - pay a 3% surcharge over the standard rate.
- What has changed following the announcement?
In July the Government temporarily increased the threshold to £500,000, saving people up to £15,000 in stamp duty.
Analysis by Rightmove suggested that buyers in England's Home Counties areas clustered around London would be particularly likely to make big savings, thanks to the uplift in the stamp duty threshold to £500,000.
It also found areas where the average price tag on a home is close to £500,000 include Dorking in Surrey (£498,422), Lewes in East Sussex (£491,304), Oxford (£479,099), Chesham in Buckinghamshire (£462,210), Borehamwood in Hertfordshire (£476,791) and Bath (£464,617).
- What could the impact be on the housing market?
Richard Donnell, research and insight director at Zoopla, said it would 'provide a further boost to demand for housing'.
Stuart Adam, of the Institute for Fiscal Studies, said history showed that temporary cuts in stamp duty could provide an 'effective fiscal stimulus' to the economy.
Treasury officials believe it could spark a much wider economic recovery, with many expected to use the tax savings to invest in their new home.
Aneisha Beveridge, Head of Research at Hamptons International, said: 'The introduction of the stamp duty holiday has given a further boost to the housing market which was already showing strong signs of recovery even before its introduction.
'The number of people looking to buy a home has risen across every region in Great Britain since the announcement, with Southern areas recording the biggest increase.'
It is hoped the temporary nature of the expected announcement will encourage people thinking about buying a house to enter the market.
Property experts said the step could encourage some 'missing movers' back to the market.