Transactions in the UK housing market continued to slow in May, down 3.9 per cent, or by around 10,000 transactions, HM Revenue & Customs data has shown.
Data published today (June 22) showed that since March, transactions have fallen by 71,000.
Year-on-year last month's transactions were still up 138.2 per cent however, marking the UK's best May since 2014 at 114,940 transactions.
The current cool down follows the market’s best quarter since 2007, with HMRC recording 392,860 transactions between January and March 2021.
Gareth Lewis, commercial director of property lender MT Finance, explained these highs are “partly down to the lack of transactions last year, thanks to the pandemic, and the stimulus the stamp duty holiday is giving the market”.
At the beginning of next month, the stamp duty threshold shrinks to £250,000. This deadline has prompted many in the market to speculate a slow third quarter for house transactions.
“The tapering down of the temporary stamp duty reduction has begun, leading some to fear a housing market crash,” said Anna Clare Harper, CEO at property consultancy SPI Capital. But few are willing to call serious bets on this “crash” hypothesis.
“Until we get out of the other side of all this [government] stimulus, we won’t know exactly where we sit,” said MT Finance’s Lewis. “Only time will tell if the market falls off a cliff.”
Whilst the first half of 2021 enjoyed some record highs, these peaked in March 2021 when 173,920 residential properties were transacted. After this, a sharp decline ensued in April, followed by a much smaller decline in May.
In April, UK house price growth also slowed, breaking its eight-month long upwards trend according to the Office of National Statistics’ latest house price index.
Despite data suggesting the “boom” is cooling off, Chestertons’ research head, Nick Barnes, thinks the market is in for another spike in June.
“Comparing June’s performance so far to May, we have seen a near tripling in the number of exchanges this month,” he said.
Jeremy Leaf, RICS’ former residential chairman who is currently a north London estate agent, echoed Barnes’ sentiments.
“These figures are a little dated, reflecting a market pausing in reaction to the anticipated cut-off in the stamp duty concession.”
He continued: “On the ground, we have seen buying and selling resume and the market return to the underlying trend of growth, [...] boosted by the low cost of money and stock shortages particularly.”
Paul Stockwell, Gatehouse Bank’s chief commercial officer, reckons “the only thing which could dent transactions now is a lack of supply.
“But even this could bounce back soon as some people will have been too nervous to market their property during the pandemic,” he continued.
“And others will have been waiting for the stamp duty rush to calm down to avoid the conveyancing bottleneck.”
Even if transactions do suffer a dent, SPI Capital’s Harper thinks “house prices are likely to remain strong”. She puts this down to construction “getting harder and more expensive”, which in turn constrains the supply of existing stock.