Between September and October this year, housing transactions fell by a whopping 52%, according to HMRC. With the stamp duty holiday saving buyers in total over £6.4 billion, it’s not surprising that property purchases have fallen so dramatically. At the same time, the average home price has risen by £28,000, making it more difficult for many to get a foot on the property ladder.
Last month, the UK saw 77,000 property transactions, indicating a 52% fall from the previous month and a 28% drop from last October. HMRC said the decrease was primarily due to purchases being pushed through in time for the September 30th deadline.
The stamp duty holiday was initially brought about to boost the property market following the 8-week shutdown during the initial lockdown. Buyers were no longer required to pay stamp duty for property prices up to £500,000 between the months of July 2020 and June 2021, tapering off and eventually being fully withdrawn at the end of September 2020. This initially led to savings of up to £15,000 for home buyers and up to £2,500 during the tapering period.
Although there has been a recent home sale plummet, during this financial year there have been 842,250 property transactions, the highest recorded in a decade. In 2021, transactions peaked in March, June, and September.
With the stamp duty holiday creating a boosted property market, it’s not surprising that experts are calling for the tax to be scrapped permanently.
Director of property lender MT Finance, Joshua Elash, commented: “The monthly decrease in the volume of residential transactions is dramatic.”
‘The argument for either reworking or scrapping stamp duty together has never been louder or clearer.
‘Stamp duty is the tax holding back a property market that would benefit now more than ever from greater levels of fluidity.’
Although in total buyers saved £6.4 billion, data shows that due to factors driving up property prices, house prices were significantly higher.
Figures from the Office of National Statistics show that the average price of a home rose by £28,000 in the year up to September, signifying an 11.8% year-on-year increase.
CEO of The Guild of Property Professionals, Iain McKenzie, said: ‘A sharp drop in property transactions in October suggests that forestalling since September has caught up with the property market.’
He also stated that even though property sales were down, house prices were likely to keep increasing in the short term.
‘While transaction numbers may be lower now that the stamp duty holiday has ended, the fact that the demand for properties currently far outstrips supply means that prices are likely to keep rising,’ McKenzie added.
‘At a time when there is often a rush to get moved in before the festivities commence, we should expect that sales will continue to be steady in the run-up to Christmas.’
Others have, however, predicted that property prices are destined to fall as a result of the expected rise in the Bank of England’s interest rate, which will result in more expensive mortgages.