Residential property sales in the UK fell by 3.3% between April and May 2017 but they were 13.4% higher compared with the same month last year, the latest official figures show.
But the data report from HMRC points out that direct comparisons of residential transactions between May 2017 and May 2016 should be avoided due to the lower than usual level of transactions in May 2016 associated with the introduction of the higher tax rates on additional properties in April 2016.
‘The large increase in transactions for March 2016 followed by the substantial reduction in April is likely to be associated with the introduction of the higher rates on additional properties,’ the report says.
It also explains that non-tax factors may have played a role as well, for example the Bank of England’s plans to curb buy to let mortgages resulting in a rush to purchase before April 2016, and the European Union Referendum.
The seasonally adjusted estimate of the number of non-residential property transactions increased by 1.5% between April 2017 and May 2017, some 4.6% higher compared with the same month last year.
According to Stephen Wasserman, managing director at West One Loans, it is confirmation of the cooling in the market at present but despite a period of gradual decline, he is cautiously optimistic that sales will pick up again in the coming months.
‘The market has shown itself to be incredibly resilient, but, during this time of prolonged economic uncertainty, it is important that borrowers are aware of the variety of financing options available to them. We have seen a fivefold increase in bridging loans since 2011 as borrowers make the most of the flexibility and speed this type of financing offers,’ he said.
But Ishaan Malhi, chief executive officer of online mortgage broker Trussle, is not so sure. ‘It seems as though many took the wait and see approach to buying or selling a home in the lead up to the general election, preferring to know the lay of the land before making such an important financial decision,’ he said.
‘With the vote turning out the way that it did, home owners are unlikely to be jumping into action until we at least have a little more clarity on the shape of the Government. Because of this, it’s possible the downward trend in transactions could continue into June,’ he pointed out.
‘Home owners may also be weighing the recent fall in house prices into their decision to sell, but with the spike in inflation we’re witnessing, it looks as though interest rates could rise at some time soon,’ he added.
But Richard Sexton, director of chartered surveyors e.surv, does not think it is a dramatic fall. ‘Despite the recent election, property transactions have not cooled off drastically and confidence in the market still remains. Summer months often see housing transactions increase and today’s lending market continues to offer competitive products and record low interest rates,’ he said.
However, he warned that an attractive mortgage market with low interest rates does not answer the fundamental issue which is stopping so many get onto the housing ladder. ‘In order to open up the market, affordable and accessible housing needs to be built to address the housing shortage,’ he added.
