Residential housing transactions rose significantly in July, shows new HMRC data.
It counts 70,710 transactions made in July on a seasonally adjusted basis. This is a 14.5 per cent rise on June and 27.4 per cent down on July 2019’s number.
Non-residential transactions came in at 8,380, a 27.6 per cent improvement on June but 18.3 per cent lower than seen in July 2019.
HMRC puts this rise down to pent-up demand, saying that the residential Stamp Duty holiday will likely not show up in transactional data “until late August or early September.”
Just Mortgages national operations director John Phillips says: “Demand has come flooding back to the market since lockdown and a lot of our brokers are reporting that they are busier than ever.
“There are some clouds on the horizon too: as the furlough scheme unwinds, it is likely we will see unemployment rise, and it remains to be seen how long the economic downturn will last.
“But the Stamp Duty relaxation is a welcome boost, and that won’t yet be showing through in these figures. and lenders are beginning to show some movement on bringing back higher-LTV products, which should help first-time buyers.
“One thing we can be pretty certain of is that, barring a second wave of coronavirus and a further lockdown, the second half of 2020 will be better than the first. July’s figures are a promising start to that.”
Hope Capital chief executive Jonathan Sealy adds: “Covid-19 has created changing patterns of demand, as people adapt to a slightly different lifestyle, with less commuting and more working at home. This is also likely to feed through into increased transaction volumes, with many people considering a move away from large towns and cities.
“As the recovery unfolds, we’re expecting to see a lot of demand from buy-to-let landlords, taking advantage of the Stamp Duty cut to expand their portfolio and provide rented housing that meets people’s desire for somewhere quiet to work at home, and better access to the great outdoors.”
Private Finance director Shaun Church warns that demand may drop. He says: “Despite the sharp recovery in transactions, there are clear headwinds which could suppress demand. High levels of uncertainty in the property market and the UK economy, compounded by huge demand from borrowers, all indicate that rate rises are on the horizon.
“Raising rates on higher LTVs would increase costs for first-time buyers – the group of consumers hardest hit financially by the pandemic – as they often rely on these products to make home purchases. Any savings gained by increasing rates on higher LTV products are likely to be passed on to those who represent less risky borrowing propositions.
“The government urgently needs to start preparing for how it is going to maintain high levels of demand after the Stamp Duty threshold reverts to normal. A phased reintroduction of the lower threshold would ensure buyer activity does not suddenly fall off a cliff.”
