The UK’s residential housing market saw transaction volumes more than double in June, rising 108.5 per cent on their May figure.
According to the latest HM Revenue & Customs figures, 213,120 house transactions were approved in June on a non-seasonally adjusted basis - the last month of the stamp duty holiday before the wind down began.
April to June 2021 also marks the highest second quarter in housing transactions since the introduction of the statistics in April 2005.
“June is always a busy month for the property market but this one was exceptional,” said Mark Harris, chief executive of mortgage broker SPF Private Clients.
“With lenders keen to lend and having plenty of money to do so, mortgage rates continue to fall to new lows,” he added. “As Nationwide launches a five-year fix this week at sub-1 per cent, there continues to be plenty of competitive deals to attract borrowers.”
Tomer Aboody, director of property lender MT Finance, believes this trend “is likely to continue for a while yet, while money remains cheap” and house prices rise further due to lack of supply.
Between July 2020 and June 2021, the first £500,000 of a property’s value incurred no stamp duty land tax. Then in July, this threshold was reduced to the first £250,000, before a final wind down to the land tax’s usual level of £125,000, or £300,000 for first-time buyers, in October.
A London School of Economics (LSE) report found the stamp duty holiday has generated 140,000 “extra” transactions in the UK mortgage market, whilst Rightmove estimated some 1.3m buyers have benefitted from the tax relief.
But LSE also found the holiday contributed a meagre 0.1 per cent of GDP, generating £2.2bn in expenditure compared the UK’s gross domestic product total of £1.96trn in 2020.
Aboody suggested the UK’s chancellor, Rishi Sunak, should look at reformatting stamp duty so that downsizers don’t have to pay it or face a significant reduction.
“This would have the desired result of more properties coming to market, keeping a lid on prices while further boosting the wider economy,” he said.
Jeremy Leaf, a north London estate agent and the former Rics residential chairman, noted housing transaction activity “has reduced” since “the frenzied rush” in June reflected in the ONS figures.
“Particularly in London where the savings were greatest,” he added. “Early signs are that sales will be down significantly but we have noticed nearly all of our transactions are continuing with very few renegotiations. This leads us to believe prices will not be markedly different over the next few months.”
Anna Clare Harper, CEO of property consultancy SPI Capital, agreed that although transactions are expected to slow over the next year, “prices are not expected to fall”.
She explained: “What is interesting about what will happen next is a unique feature of the housing market. Unlike in the stock market or cryptocurrencies, people don’t tend to sell at a lower price than they paid, unless they really need to.