Residential property transactions in the UK fell by nearly 63% in July on a monthly basis, new figures from HMRC show.
The provisional seasonally adjusted figure stands at 73,740 transactions, which is 4.2% higher than that recorded in July 2020.
Between May and June this year, HMRC noted a 219.1% jump in residential transactions.
Stamp duty forestalling leads to 219% jump in residential property transactions
July’s drop off was expected, says Yopa chief analyst Mike Scott, “as many sales were rushed through to beat the deadline at the end of June to avoid paying stamp duty.”
Non-residential transactions were also lower, coming in at 9,760 – a fall of 5.9% on June. This figure is 21% higher than July 2020’s figure, however.
Scott believes that despite the ending of the stamp duty holiday, “there will be close to 1.5 million completed home sales in 2021, which will be a nearly 50% increase on the pandemic-affected 2020 number, and the highest figure since 2007.”
Just Mortgages national operations director John Phillips agrees. He says: “We are still on track for the most transactions in a calendar year for over a decade, and while some of the urgency to move may have faded, the desire is still there.
“Prices are still high, however, as there are roughly 15 buyers for every property on the market, and even if that reduces, properties with gardens are still going to attract bidding wars.
Phillips adds: “With this slight reduction in transactions, now is the time for brokers to focus on remortgages and protection. We estimate there will be £5bn worth of mortgages maturing before the end of the year, so brokers should work with clients to ensure they are on the best rate,” he adds.
Meanwhile, Phoebus Software head of sales and account management Adam Oldfield warns: “Rising inflation remains a spectre on the horizon, one that we can’t afford to take our eye from.
“If inflation rises as the government expects I suspect we may see the Bank of England increasing the base rate, and with it mortgage rates will rise. As furlough comes to an end next month we will get a fuller picture of employment and, unfortunately, unemployment. The financial impact will then all too be evident.
“The term ‘make hay while the sun shines’ is undoubtedly apt for those looking to move or remortgage in the near future.”
And MT Finance director Tomer Aboody says: “It is inevitable that there would be a shift in sentiment from buyers as the initial shock from not being able to take advantage of the stamp duty break takes its toll. But these same buyers will still be looking to purchase and are likely to forget all about the ‘saving’ they missed out on in the next month or two. Cheap mortgages will inevitably help many continue to push ahead with a purchase.
“What this trend tells us is that stamp duty is a barrier which significantly impacts the market. Something needs to be done to adjust this so that more properties come to market, perhaps its removal or adjustment for downsizers in future,” he concludes.
