Property transactions nudge up

Property transactions nudge up

The number of residential property transactions increased by just 0.2 per cent at the end of last year.

According to HM Revenue & Customs there were 97,250 such transactions in December, up by 220 from the previous month.

But this is 8.5 per cent lower than the same month in 2015 while also significantly lower than the 173,730 transactions recorded last March.

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HMRC said the sudden spike in transactions earlier in 2016 was probably due to the introduction of a higher stamp duty rate for second homes.

It added: “Non-tax factors may have played a role as well, for example the Bank of England's plans to curb buy-to-let mortgages resulting in a rush to purchase before April 2016, and the EU referendum affecting transactions in recent months.”

During 2016 as a whole there were 1.23m residential property transactions – a similar number to the 1.22m seen in the previous two years.

Ishaan Malhi, chief executive of online mortgage broker Trussle, said:“Stamp duty rises may have exaggerated the decline, but the underlying issue is that there are simply too few homes to go around.

“This is pushing prices up at a rate which is completely out of step with wage growth and consumer spending power, and aspiring homeowners are being left behind.

“For the time being, mortgage rates are the cheapest they've been in years. While this is helping buyers, affordability can only go so far when there aren’t enough houses on the market.”

March’s spike was the highest number of transactions in a single month recorded in the past decade.

It was higher than the average number of monthly transactions before the 2007 crash, when there were around 150,000 a month.

Stephen Smith, director of Legal & General Housing Partnerships, said: “Two key factors are hindering the housing market from reaching its full potential.

“The first is the ever-expanding gap between supply and demand, and the second is the increasing disparity between wage inflation and house price inflation.

“These two components need to be resolved if we are ever going to see the return of a healthy and stable housing market.”