Real estate transactions fell 55% in June compared to the 2021 stamp duty holiday wholesale, HMRC says – as experts claim house prices could be heading lower
- The number of properties sold decreased by 55% in June 2022 compared to the previous year
- Experts say the sharp decline is due in part to last year’s stamp duty holiday
- Others warn that the cost of living crisis is beginning to affect the market
- HMRC data also shows a decline of 3.1% between May and June 2022
Official figures showed that the number of residential properties sold in the UK fell by 55.1 per cent in the year to June.
HMRC said the total number of transactions was 96,290, down 55.1 percent from the 214,530 transactions recorded in June 2021.
On a monthly basis, transactions decreased by 3.1% compared to May 2022.
The significant decline in home purchases year-on-year is likely to be driven by the end of the stamp duty holiday in June 2021.
With the cost of living crisis continuing to put pressure on homeowners, experts and movers speculate that the decline in transactions will continue
The home movers tax break, introduced in July 2020, has increased activity as buyers can save up to £15,000 in tax until 30 June 2021.
The potential savings was then reduced to £2,500 until September 2021.
The figures for 2022 are more in line with those for June 2019, when 100,340 properties were purchased.
This indicates an exit from the market after the turmoil of the past few years. However, experts said the housing market is now also being affected by the cost of living crisis.
Back to normal: Real estate transactions rose significantly during last year’s stamp duty holiday but returned closer to pre-pandemic levels once the tax break ended
Jeremy Leaf, North London estate agent and former RICS residential agent, said: ‘While these figures inevitably reflect the activity of several months ago, they are always a better indicator of the strength of the housing market than the more volatile house prices.
“The latest figures are no exception and show how the cost of living crisis and high interest rates in particular have contributed to the length of transactions and the reduction in the number of transactions.”
Joshua Eilach, Director of Property Lending at MT Finance, added: “A cost-of-living crisis is beginning to play out with a significant drop in transaction activity in the real estate market compared to the same period last year, reflecting the broader uncertainty in the economy as a whole. , in addition to the frenzy we witnessed last year when the stamp duty holiday was about to end.
“We must be vigilant as this trend could lead to a more significant and rapid cooling in the housing market than anticipated, which will translate into downward pressure on home prices as homeowners and investors alike focus on cost savings.”
While not everyone will welcome them, falling home prices can be good news for first-time buyers and certain types of home movers.
A report released today by the Yorkshire Building Society found that the cost of living crisis is preventing more than a quarter (27 per cent) of people in the UK from buying a home. The figure rose to a third (33 per cent) of all first-time buyers in the UK.
However, the cost of living crisis may mean that keeping deposits is still difficult.
Economic volatility was also among the most frequently cited concerns of those who are looking for a home, but feel unable to buy – with more than a fifth (22 per cent) in the Yorkshire Building Society report saying the current economic climate was another factor holding them back. who buy it. Make a purchase decision.
Ben Merritt, director of mortgages at the Yorkshire Building Society, says: ‘Despite a relatively recent development, the cost of living crisis has hit the top of the list of concerns when it comes to buying a home.
“The crisis is now being felt among the population and is spilling over into all aspects of life. Moreover, with the inflation rate now at 9 per cent, it shows no signs of abating.
With little vision of what the future might hold, or indeed how long the crisis will last, our research shows that many buyers are hesitant in the market, feeling uneasy about the prospect of buying in the current economic climate.
The extent of a supply problem in the housing market is evidenced by the fact that, despite this, home prices have continued to rise, with demand remaining far greater than supply regardless.
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