Property sales slow gently rather than screeching to a halt, but buyer fatigue could apply the brakes

• • 102,100 homes sold in May (not seasonally adjusted), down around 10,000 from April and around 71,000 since March.
  • It’s still more than double the previous May, but this was back when the market was near its low point.

  HMRC published monthly property sales for May: https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above

  Sarah Coles, personal finance analyst, Hargreaves Lansdown:

  “The stamp duty holiday frenzy is gradually calming down, rather than heading hell for leather over a cliff edge. However, the stress of buying in such a busy market, especially one where the deadline shifts overnight, could mean that when it tapers in July, buyers and sellers are poised to throw in the towel.

  The drop in sales in May isn’t a huge surprise: we tend to see this pattern when a tax change distorts the market. Although the stamp duty holiday deadline was postponed to the end of June, it wasn’t announced until the beginning of March. It usually takes just over three months to go from agreeing a sale to completing on it, so there’s a good chance that most of these sales would have been agreed in February, when buyers assumed they would be paying stamp duty in full.

  The deadline extension is likely to mean a bumper June, as buyers seized the brief window of opportunity to get a tax-free purchase. This is likely to be followed by slower sales in the summer.

  The fact that we saw a relatively gentle fall, rather than a cliff edge in May, could indicate that when the stamp duty holiday finally tapers to an end, we’ll avoid vertiginous drops. However, there’s also the risk that buyers and sellers are at the end of their tether. Anyone trying to get a sale over the line at the moment is likely to have lived through upheaval and uncertainty for months, along with delays from an overloaded system. There’s a real risk that someone in the chain decides the threat of a higher tax bill is the final straw, in which case July risks slowing significantly.”

Kindly shared by Hargreaves Lansdown

Main photo courtesy of Pixabay