Residential property transactions have doubled year-on-year amid the pandemic, stamp duty holidays and the introduction of a stamp duty surcharge for non-UK residents.
Data from HMRC, published today (April 21), showed the provisional, seasonally adjusted estimate of residential transactions in March was 190,980 - double (102.3 per cent) the amount of transactions in March 2020, and a third (32.2 per cent) higher than February 2021.
But figures for seasonally adjusted transactions should be treated with “additional caution”, according to HMRC.
The tax authority said the extension of the stamp duty holidays in England, Wales and Northern Ireland caused “forestalling” behaviour as taxpayers sought to meet the original March deadlines, as well as the introduction of the stamp duty surcharge from April for non-UK residents.
The provisional, non-seasonally adjusted estimate of residential transactions was 180,690 in March, double (107.9 per cent) the amount of transactions in March 2020 and 49.6 per cent higher than February 2021.
Mark Harris, chief executive of SPF Private Clients, commented: “Transactions are always a surer sign of the health of the housing market than house prices and a surge in activity in March shows that people continue to hunt for more space, while taking advantage of the stamp duty holiday and cheap mortgages.
“With a growing number of lenders offering high loan-to-value deals at 95 per cent, this appetite is only going to increase, pushing transaction numbers (and prices) higher still, particularly if supply continues to lag behind demand.”
But Zena Hanks, partner in the private wealth team at Saffery Champness, said demand could weaken as Covid restrictions lift.
Hanks commented: “As the UK economy begins to open up again following the lockdown, we may see the demand to move house begin to wane as people return to their usual busy schedules and their commutes to and from the office.”
The property transactions figures from HMRC coincided with the publication of the latest UK House Price Index, which showed house prices increased by 8.6 per cent in the year to February, up from 8 per cent in January.
Kevin Roberts, director at Legal & General Mortgage Club, commented: “Demand for homes has been remarkable since the start of the year and this has contributed to the house price increases seen in recent months.”
Roberts added: “Of course, it is important that the whole industry works together and with policymakers, to ensure this growth is sustainable. By this, we mean supply must be boosted to keep pace with demand, ensuring the prospect of homeownership is an affordable reality for all.”
Indeed, the Land Registry in its February House Price Index summary highlighted a RICS survey that found Covid restrictions in February appeared to deter new vendors from putting their properties on the market.
It also noted the Bank of England had reported estate agents in Q1 2021 expressed concern over a shortage of properties for sale, with buyers appearing to be less price sensitive than normal.