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Why the 20% fall in annual sales belies robust transactions last month

Christina Hoghton
Written By:
Christina Hoghton
Posted:
Updated:
25/03/2022

Lies, damned lies, and statistics: The staggering annual drop in homes sales in February isn’t quite what it seems

Sales of homes fell over 20% between Febuary 2021 and 2022, according to official transaction figures from HM Revenue & Customs.

It found that UK residential transactions totalled 96,250 in February 2022, down 20.6% compared to last year.

However, when you look a bit more closely at the figures, there’s a good reason for the large difference.

Reading between the lines

A year ago many buyers brought forward their purchases to get the maximum benefit from the Stamp Duty holiday, which had initally been due to end in March.

It means it was a stellar Feburary, with an unusually high number of home sales. The 20% fall this year therefore looks more negative than it actually is and HMRC said the figures ‘should be treated with caution’.

In fact, sales in February 2022 were 15.3% higher than in January 2022 and still the second highest February transaction figures in the last 10 years (after 2021).

Ross Boyd, founder of mortgage comparison platform, Dashly.com, said: “Comparisons between February this year and last are like comparing apples with pears given the impact the Stamp Duty holiday had on transaction levels.

“There’s still life in the market, as shown by the fact transaction levels in February this year were up on January. Right now, transaction levels are being hindered by the sheer lack of supply.

“The lack of stock, coupled with the cost of living crisis, interest rate rises and impending tax hikes means transactions are likely to plateau during 2022.”

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, cautioned: “Reality can’t be kept at bay forever. Higher energy bills are already hitting mats around the country, we’ve seen horrible hikes in prices at the pumps and in the supermarket, and tax rises are just around the corner.

“The war between Russia and Ukraine is also having an impact, both on sentiment and on pushing inflation even higher. We knew there would come a time when buyers decided they simply couldn’t afford to stretch themselves, and we’ve had the first indications that we may have hit that point.”