The residential property sales slump largely affected the South of the UK, with 62% of areas that saw falling transactions in 2019 in that part of the country, according to new research.
Indeed, most parts of the UK actually saw transaction volumes grow last year, the analysis by property developer Southern Grove found. It says there was a ‘piggy bank’ mentality and rising stamp duty exacerbated the issue.
Sales volumes began to collapse on an annual basis in May after the country experienced a Brexit wobble. But it was in the South where stretched valuations made the region acutely vulnerable to the risks associated with the political deadlock.
This meant that a widespread decline in sales with much of Southern England and Southern Wales skewing the overall picture.
The slump first appeared in June’s HMRC figures which showed sales volumes had dropped 11.3% in the 12 months to May 2019 as home owners and buyers shelved their plans pending Britain’s exit from the European Union on March 29.
The analysis shows that of 406 local authority areas in the UK, some 168 or 41.4% saw transactions fall between May 2018 and May 2019 and 104 of these places, 62%, were in the South.
The collapse in the year on year sales figures later worsened, reaching a 16.5% fall in June and 12.4% drop in July before largely recovering in August. Southern Grove believes unrealistic vendors and costly stamp duty exacerbated the slowdown.
Worst affected areas included North Dorset with a fall of 35.4%, Harrogate down 33.9%, East Cambridgeshire down 29.6%, Broxbourne down 27.8%, East Hertfordshire down 27.4%, Slough down 27.3%, Camden down 27.2% and Hammersmith and Fulham down 25.9%.
In the year to May 2019, Wales saw sales volumes climb 5.3% on average with nine of 22 local authority areas, 41%, seeing declines. In England, transactions increased by 2.9% on average but fell annually in 157 of 352 areas, 44.6%. In Scotland, just two of 32 local authorities, 6.3%, saw a fall in sales and the entire country actually recorded a 20.5% rise in transactions.
‘This is an eye-opening dissection of a collapse in sales that was clearly weighted towards the South. It’s a region that has seen huge price growth over the past five years so it’s no accident,’ said Andrew Southern, Chairman of Southern Grove.
‘Home owners in more expensive areas clearly felt it was better to ride out the storm, as any subsequent purchase would carry a hefty stamp duty bill at a time when they couldn’t be confident property values would be bulletproof in the medium term,’ he pointed out.
‘In that situation, it is only human to wait and see what happens. High valuations give homeowners a taste for the piggy bank they think their home has become and they are often wary of doing anything that could jeopardise that peak valuation. It’s in this type of market that the hammer blow of stamp duty is most unhelpful. It’s a tax so punitive as to be totally counter-productive,’ he added.