Official figures show that sales are down substantially in the UK
The latest official sales figures published for the UK show that transactions have decreased substantially both on a monthly and annual basis.
The provisional seasonally adjusted number of residential property transactions decreased by 9.6% month on month in June and were 16.5% lower than June 2018, according to the data from HMRC.
The data also shows that year on year non-seasonally adjusted residential transactions in June 2019 were approximately 25.1% lower than June 2018.
In the non-residential sector transactions decreased by 7.2% between May and June 2019, and were 12.4% lower than June 2018. Overall in June there were 84,490 residential and 9,140 non-residential transactions.
There are various theories as to what is happening. According to Mike Scott, chief property analyst at full-service estate agent Yopa, the figures are hard to reconcile with data from UK Finance showing little change in the number of mortgages completed in May, when compared with May 2018.
‘Taken together, the data suggests that the number of mass market purchases of homes with mortgages hasn’t changed much, and therefore there has been a very sharp decrease in the number of homes bought for cash, which tend to involve buyers who are not in chains and have no pressing need to move, letting them delay their purchase,’ he said.
‘The most likely explanation is that the uncertainty of the impending Brexit deadline caused home-buyers, especially cash buyers, to hold back from agreeing purchases in the first three weeks of March, before an extension was agreed, and that these delayed sales would otherwise have gone on to complete in May or June,’ he explained.
‘We therefore expect that the year-on-year comparison will start to improve in the July figures, and will be fully recovered by the autumn, at least until we start to see the effects of the new October deadline around the end of the year,’ he added.
Tomer Aboody, director of property lender MT Finance, described the fall off as ‘astonishing’. He believes that while some transactions are happening, the volumes are not there as people can’t afford to move. ‘Affordability is an issue, coupled with uncertainty around Brexit, which is having a significant impact on people’s lives and decisions about whether to move or not,’ he said.
‘The government needs to do a lot more to stimulate the housing market. There is a knock-on effect as if people are moving, whether at the top or the bottom of the market, it helps everyone else. Hopefully, the new Prime Minister Boris Johnson, who has declared that he wants to reform stamp duty, will have the desired effect of helping get transactions back to steady growth, which is good for everyone,’ he added.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, pointed out that it is transactions which are a much more important test of property market strength than prices, as the latter can fluctuate wildly.
‘Looking forward, uncertainty is playing a big part and from confirmation of the new prime minister to hopefully conclusion of the European Union negotiations by the end of October by the latest, some of that inevitable pent-up demand will be released. Signs of improving demand in particular over the last few months have been very encouraging, and we would like to see more of this,’ he added.
Craig Hall, head of broker relationships and propositions at the Legal & General Mortgage Club, also believes that a change in stamp duty is needed. ‘One solution would be to extend the current Stamp Duty exemption to last time buyers, aiding them to easily downsize to a more suitable home, freeing up larger homes to growing families looking to move up the ladder,’ he said.
But Marc von Grundherr, director of agents Benham and Reeves, believes it is stutter rather than a trend. ‘With many of us believing we would be exiting the EU at the end of March, it stands to reason that the vast majority of buyers may have refrained from a sale until this event had passed,’ he said.
‘Therefore any dip in transactions should be viewed as a momentary stutter and with many other market indicators suggesting a return to form and growing levels of buyer demand over the last few months, we should start to see the number of properties being sold climb from here on in,’ he pointed out.