Residential transaction in the UK reached almost 100,000 in April 2017, some 20.3% higher than the same month last year, the latest official figures show.
There were 99,910 residential transactions and 9,980 non-residential sales. However, this was down by 3.2% month on month, according to the data published by HMRC and April 2016 saw sales fall due to tax changes.
Indeed, the data report suggests it is best to avoid direct comparisons of residential sales between April 2017 and 2016 due to the unusually low level of transactions in April 2016 due to the introduction of extra stamp duty on additional homes.
HMRC also pointed out 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 EU referendum affecting transactions in recent months.
The residential figure includes properties paying the main and additional rates. For April 2017 the number of non-adjusted residential transactions was about 22.5% lower compared with March 2017. The number of non-adjusted residential transactions was 12.8% higher than in April 2016. The figures for the three most recent months are provisional and therefore subject to revision.
‘While residential transaction levels are significantly higher than a year ago, the changes to stamp duty for second home buyers in March 2016 render an annual comparison pointless,’ said Shaun Church, director of Private Finance.
‘Home owners and investors rushed to beat the deadline last year, which led to an explosive March followed by a quiet April for the residential market. Today’s market remains slightly sluggish, with the number of seasonally adjusted transactions dipping between March and April,’ he explained.
‘The upcoming election is unlikely to be having a significant effect on property transactions, particularly as the residential market took last year’s Brexit vote in its stride. The main reason behind weaker transaction figures remains the changes to stamp duty, which have particularly limited activity towards the upper end of the housing market,’ he added.
According to Stephen Wasserman, managing director at West One Loans, the property market will take a while to fully recover from the jitters caused by stamp duty hikes and economic uncertainty and there is also the election coming up in June.
‘Nevertheless, we’re confident the sector will bounce back. Although the market is resilient, during times of prolonged economic uncertainty it is important that borrowers are aware of the range of financing available. Flexible borrowing options, such as bridging loans, can help to speed up the transaction, enabling buyers to move faster and capitalise on opportunities in this uncertain environment,’ he said.
Jeremy Leaf, a north London estate agent and a former RICS residential chairman, believes that while, at first glance the figures might appear to be disappointing but when you consider what was happening this time last year and what has happened to property transactions in the past few months, they represent steady progress for the housing market.
‘Transaction numbers are really key to what is going on in the market, how many people are actually getting on with the business of moving, and these numbers suggest some resilience,’ he said.
‘What the HMRC figures do show is the huge impact that changes to stamp duty can have, not just on property transactions but the wider economy bearing in mind how many people are dependent in other trades on people moving home,’ he concluded.
First published in Property wire 24th May 2017