Recent property transactions data makes for grim reading for the UK property market, showing the impact of the end of the stamp duty holiday.
According to the official figures from HM Revenue & Customs, non-seasonally adjusted property sales fell by 85,090 transactions in October.
This fall in the volume of sales means property market transactions declined by 48.4% compared to September.
Compared to a year earlier, transactions were 30.1% lower. As a result, the UK property market experienced its slowest October since 2012. However, sales for the 2021/22 tax year to date remain significantly higher than during any other year in the past decade, at a total of 868,040 transactions.
A decline in property sales was widely expected following the end of the stamp duty holiday and due to typically lower sales volumes as the winter season starts.
On a monthly basis, the decline in sales looks dramatic, but transactions were artificially high in late summer due to buyers attempting to beat the deadline for the end of the stamp duty holiday.
Comparing the figures to October 2020 also reveals a distortion in the data. Last October saw an unusually high number of transactions, supporting busier than usual market conditions last winter.
Buyers often ‘hibernate’ during the winter months before market activity picks up again in the New Year.
There remains a shortage of properties for sale in the UK, with the average estate agent only listing 37 properties on its books, a factor that appears to be supporting current price growth in the market.
Karen Noye, Mortgage Expert at Quilter, said:
“There has also been a fundamental change in what buyers want as people move out of cities to seek more space. This, coupled with fewer international buyers has already impacted transactions in built up areas, such as central London, and the end of the stamp duty holiday will have exacerbated the downward transaction trend.
“The latest ONS UK house price index showed a record high average UK house price of £270,000 in September, £28,000 higher than the same time last year. While prices still seem to be on the up, the huge drop in property transactions may well begin to nudge overinflated house prices back down over the coming months.
“While we may see house prices begin to slowly decrease, the anticipated interest rate hike will likely put potential home buyers off further. Not only do house prices remain in a hugely inflated state, but a rise in interest rates will push mortgage costs higher as providers are typically quick to pass on rate rises to their customers.
“A rate rise would likely push home ownership even further out of reach for first time buyers. To enable them to get on the property ladder, they often need to borrow the maximum amount available. An increase in monthly costs would make buying a home even less affordable, particularly on top of often already higher mortgage rates as a result of higher loan to value.”