Property sales fell in July, following June surge
There were 73,740 UK residential transactions in July 2021, according to HM Revenue & Customs.
This was up by 4.2% compared to a year ago but massively down by 62.8% compared to June 2021.
Of course the figures are skewed by the huge spike in transactions in June when buyers rushed to complete their purchase before the stamp duty deadline.
This forestalling activity caused two recent peaks for UK residential transactions, said HMRC, one in March 2021 of 174,080 caused by the original 31 March 2021 Stamp Duty holiday end date and another in June 2021 caused by actual end date.
Scott Taylor-Barr of Shropshire-based mortgage broker, Carl Summers Financial Services, said: “The drop in the number of property transactions in July was inevitable because earlier in the year, due to the stamp duty holiday, the market was breaking pretty much every record going. The rest of the year will likely see a further slowdown, as the second phase of the stamp duty holiday ends and people start to gear up for Christmas.”
Sarah Coles, personal finance analyst at Hargreaves Lansdown, added: “Property sales tumbled almost two thirds in July, after the stamp duty holiday deadline passed. It demonstrates the powerful psychological impact the tax break had, which went way beyond the actual cash buyers could save.
“Property sales had climbed quickly from record lows when the market reopened in May 2020, but growth had tapered off by the time the stamp duty holiday was announced that July. From that point on, as sales filtered through, they started climbing way above their usual levels, to reach record highs in the month before the tax break tapered.
“The stamp duty holiday didn’t create demand from nowhere. There was already a crowd of people ready to buy because of changes in how we wanted to live, and pent-up demand from the closure of the market during the first lockdown. The tax break just opened a window of eight months, through which this crowd of people tried to squeeze. Eventually this was extended and tapered, but it kept the pressure up.
“It meant a bulge in property sales, and the fact there were fewer sellers than buyers at a time of such massive demand, pushed prices through the roof.”