Property sales in the UK have fallen substantially, according to the latest seasonally adjusted figures published by HMRC which collects the property tax paid on transactions.
Residential transactions fell by 6.4% between April and May and were 11.3% lower than in May 2018 while non-residential sales fell by 0.8% month on month and by 3.7% year on year.
The data also shows that in May 2019 there were 89,810 residential transactions and there were 10,090 non-residential transactions.
According to Adrian Moloney, sales director at OneSavings Bank, the figures indicate that political uncertainty remains a key drag on the market overall, affecting sentiment and decision-making, with London especially experiencing a slowdown in transactional activity.
‘We’re seeing both buyers and sellers putting their plans on hold. Once the political details are clearer, we’ll have a degree of certainty which could trigger a flurry of activity.
Houses are on the market for longer than we have seen in recent months, and with the summer holidays coming up, this trend is likely to continue,’ he said.
‘Landlords with established portfolios may seek to take advantage during this uncertain patch. As house prices are driven down, this will present active buyers with opportunities,’ he added.
Tomer Aboody, director of property lender MT Finance, believes that it should not be a surprise that sales volumes are down given all the political uncertainty combined with the fall-out from additional stamp duty on second homes that the market has had to deal with.
‘While stamp duty hikes slowed the market down as expected, it failed to result in a big uplift in first-time buyers as they continue to face affordability issues. With this back drop, developers are reluctant to push forward with developments, preferring to sit on plots with planning until they can see a convincing upturn,’ he pointed out.
‘The steady trend in non-residential purchases can be attributed to the fact that there has been no additional stamp duty. Multi-let units are providing yield to investors in a market with low interest rates, so this is proving to be a sensible asset class for investors,’ he added.
It means that lenders have to try to attract the buyers who are around, according to Mark Harris, chief executive of mortgage broker SPF Private Clients. He pointed out that a number of big players have been cutting their mortgage rates in the past couple of weeks.
‘Lenders remain keen to lend and are working hard to compete for a limited pool of business. Those buyers who are ready to take the plunge, and need a mortgage, will find plenty of deals at competitive rates, assuming they can meet lenders’ affordability criteria,’ he said.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, explained that transactions are always a better indicator of property market strength than the more volatile house price data which tends to rise and fall more frequently.
‘This month’s numbers are no different, reflecting weakness in the market at a time when we might have expected more strength. However, the seasonal nature of the market makes spotting short-term trends difficult. Irrespective of Brexit, let’s hope the fall in the number of transactions and their impact on the wider economy is near the top of the new Prime Minister’s agenda,’ he said.
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