The seasonally adjusted estimate of the number of residential property transactions dropped by 3.3% between April and May this year, reports HM Revenue & Customs (HMRC).
The provisional seasonally adjusted UK property transaction count for May 2017 was 100,170 residential and 10,760 non-residential sales.
Residential Property Transactions Down by 3.3% Between April and May
Last month’s seasonally adjusted figure is 13.4% higher than the same month last year.
Direct comparisons of residential property transactions between May last year and May this year should be avoided, HMRC insists, due to the lower than usual level of sales in 2016. This was associated with the introduced of the higher Stamp Duty rates on additional properties in April 2016.
The large increase in home sales for March 2016, followed by the substantial decline in April, is likely to be a direct consequence of the 3% Stamp Duty surcharge, believes HMRC.
The additional tax rates were announced in the Autumn Statement 2015 for England, Wales and Northern Ireland, and in the Scottish Government’s draft 2016-17 Budget for Scotland.
Non-tax factors may also have played a role, reports HMRC, for example, the Bank of England’s plans to curb buy-to-let mortgages resulting in a rush to purchase property before April 2016, and the EU referendum affecting residential property transactions in recent months.
For May 2017, the number of non-adjusted residential property transactions was around 7.9% higher than in the previous month. On an annual basis, the non-adjusted figure was up by 15.9%.
The residential count includes properties paying the main and additional rates of Stamp Duty.
The figures for the three most recent months are provisional and therefore subject to revision.
The Director of mortgage broker Private Finance, Shaun Church, comments on the data: “Although the volume of residential transactions is higher than it was a year ago, there is little value in annual comparisons, as the market was remarkably flat in May 2016 following the changes to Stamp Duty. The residential market is clearly still struggling to move out of first gear, with these changes and a persistent lack of supply limiting transaction volumes.
“It’s not all bad news, however, as the latest research from Lloyds found that first time buyers made up almost half of all house purchases in 2016 – the highest level since 1996. First time buyers have been supported by the record low interest rates and, in many cases, a helping hand from the bank of mum and dad. This has softened the impact of high prices and creeping inflation on housing affordability”.