Residential property sales only rose slightly last month as buyers remain cautious in the run-up to the EU referendum.
According to HM Revenue and Customs, there were 89,700 residential property transactions in May, an increase of 1.5% from the previous month. Compared with the same month last year there were 11.9% fewer transactions.
Sales rose slightly in May after plummeting 45% in April. The slowdown in the market comes after buyers brought forward transactions to beat the introduction of the stamp duty charge.
The 3% stamp duty increase, which came into effect on 1 April, is part of the government’s attempt to curb the buy-to-let market and free up property for first-time buyers. The basic rate of tax relief landlords can claim on properties is also set to fall to 20% from April 2017.
Andy Sommerville, director of Search Acumen, said: “We were expecting this dip in transactions after the artificial spike engineered by the rush to beat the stamp duty hike on second homes and buy to let properties in March. That, together with the fact that transactions in total for the past three months are higher than the year before, means there is little reason to fret. The property market is slowing its pace, but with the referendum less than 72 hours away, it’s understandable that buyers are cautious with their nest eggs and where to put them.”
“Some people are waiting to see what happens on Thursday, but despite the uncertainty asking prices don’t appear to be dropping. The ultimate solution – building more houses – continues to stare us in the face, Brexit or no Brexit.”
Adrian Whittaker, sales director of New Street Mortgages, said: “Given the uncertainty surrounding the upcoming EU referendum, it’s not surprising that property transactions have seen only a slight increase in May. Each day, we are bombarded by arguments on Brexit and Bremain, and the subsequent fallout in the currency markets has clearly had the impact of deterring some buyers from going ahead with their next investment.
“However, there continues to be significant interest in the market for property, and competition remains strong. Demand will likely begin to pick up once again following the referendum, and the smart lenders will be those that can respond to this competitive environment by offering the quickest route to a mortgage.”
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