The number of residential property transactions rose by 0.2% between November and December last year to 97,250, according to figures from HM Revenue and Customs. However, this is still 8.5% lower than the same period in 2015 when there were 106,230 property transactions. HMRC pointed out that the sudden surge of transactions in March and […]
The number of residential property transactions rose by 0.2% between November and December last year to 97,250, according to figures from HM Revenue and Customs.
However, this is still 8.5% lower than the same period in 2015 when there were 106,230 property transactions.
HMRC pointed out that the sudden surge of transactions in March and subsequent drop off was most likely due to the increase in stamp duty of 3% on second homes and buy-to-let property.
The number of property transactions in March jumped to 173,730 as buyers rushed to get in before the increase in stamp duty hit, falling to 81,700 the following month.
Overall, there were 1.23 million property transactions in 2016 – a 10-year high.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The number of transactions recorded in December is encouraging because it reflects what we have been saying for some time – that the end of 2016 showed the housing market was much more resilient than many gave it credit for and augurs well for the forthcoming first quarter.
“However, the interesting point that these figures raise is the impact of a change in stamp duty on the number of transactions. What we want to see is activity, not price boom and bust, and the numbers show that even a small change in stamp duty can have a disproportionate impact on the number of sales.”
Shaun Church, director of mortgage broker Private Finance, said: “Reflecting on the second half of the year, the property market ended 2016 on more of a whimper than a bang, with transactions remaining largely flat and falling year-on-year.
“However, 2016 has been a very unusual stage in the life of the UK housing market with stamp duty changes resetting the dial for investors and wider uncertainty caused by the EU referendum. Given these challenges, the market has proven to be remarkably resilient and end-of-year sales meant December brought the largest monthly transaction total of the new stamp duty era.
“Although we have seen a degree of recovery since April’s reform, overall activity levels do not paint the full picture of pressures facing would-be homebuyers. Low supply continues to pose an affordability challenge for buyers at the lower end of the market, and there has been a continued slowdown in sales of higher value properties. The stamp duty change was originally designed to boost tax revenues but with fewer high value transactions taking place, this could ultimately prove to be counter-productive.
“However, the good news for potential buyers is that stamp duty changes have suppressed house price growth at the upper end of the market, which has the potential to offset some of the additional costs they would otherwise face from a higher tax burden.”
