Property Sales Down by Over a Third as House Prices Continue to Rise

Figures released by HMRC show house sales across the UK have seen a decline of more than one-third in March, when compared with March 2021.

Records show 11,650 home sales for residential properties took place in March, equating to a drop of 35.7% since March 2021. However, this also indicated a slight rise of 2.6% when compared with the previous month, February.

However, HMRC cautioned that these figures be treated cautiously due to the effect that the stamp duty holiday had on the property sales market, resulting in many people rushing out to buy before it was removed in September.

Initially, the stamp duty tax relief was scheduled to be finished in March 2021 but was later extended to June and then tapered to September 2021.

Managing director of Corecon, Andrew Montlake, commented: ‘The stamp duty holiday has distorted the data, so it was inevitable that transaction levels in March were down fairly significantly on the same month last year.’

‘To make matters worse, there is an extraordinary lack of stock. Transactions need buyers and sellers, and there is a distinct lack of the latter.

‘Moving forward, households face countless headwinds during 2022, primarily in the form of rising interest rates and soaring inflation, and these are likely to restrict transaction levels.

‘However, tenants remain desperate to get out of the rental market as rents hit new highs, and this will maintain a certain level of transactions. The ongoing rush to get out of the rental market may also explain why transaction levels in March were up in February.’

The chief executive of The Guild of Property Professionals, Iain McKenzie, commented that residential property sales continue to appear to ‘inhabit a parallel world when compared against all other economic indicators.’

He added, ‘Home moves are down year-on-year, but only because of a rush to buy in March last year caused by the impending end of the popular stamp duty holiday.

‘The industry continues to see a lack of properties on the market, which is pushing up prices across the board.

‘Demand remains high, and the market looks likely to keep moving upwards as it continues to ignore all the uncertainty in the rest of the economy.’

Jeremy Leaf, a north London estate agent and former RICS chairman, said: ‘Demand still comfortably exceeds supply, and correctly priced houses continue to attract considerable interest while mortgage repayments remain relatively affordable.’

Director of Legal & General Mortgage Club, Kevin Roberts, said: ‘Despite the pressure on borrowers caused by the rise in the cost of living, demand remains high, and the overall outlook for the market is strong. This is another clear reminder of the resilience of the current housing market and its ability to weather difficult conditions.

‘Even as the market experiences a healthy spring, the more complicated conditions mean that the role of advice is now more important. Borrowers may well need more support and reassurance to find the right mortgage for their needs. This is an opportunity for advisers to really demonstrate the scope of their expertise and add value during what will be a pivotal time for their clients.’

Last month, the Office of National Statistics revealed figures that show property prices have increased by 10.9% in the year to February, up from 10.2% in January.

February saw average house prices rise to £277,000, which indicates a £27,000 increase from the same period in 2021.