The number of property sales plummeted by 61.5% in July to 82,110 from a record high of 213,120 in June according to HMRC.
Property experts said these figures illustrated the effect the stamp duty holiday had on the property market following the pandemic.
Indeed, Sarah Coles, personal finance analyst at Hargreaves Lansdown, said it demonstrated the ‘powerful psychological impact’ the tax break had.
“It went way beyond the actual cash buyers could save,” she said.
Sarah added: “The stamp duty holiday didn’t create demand from nowhere. There was already a crowd of people ready to buy because of changes in how we wanted to live, and pent-up demand from the closure of the market during the first lockdown.
“The tax break just opened a window of eight months, through which this crowd of people tried to squeeze. Eventually this was extended and tapered, but it kept the pressure up.
“It meant a bulge in property sales, and the fact there were fewer sellers than buyers at a time of such massive demand, pushed prices through the roof.”
Indeed, while today’s figures show sales had fallen dramatically following the June 30 deadline, the number of July transactions was still 1.8% higher than the same time last year. Although, this figure was generally lower than in a ‘normal’ July.
Have you missed the boat?
Now, with the full stamp duty holiday behind us and the tapered version due to finish on September 30, many will be wondering what will happen to the property market next.
Sarah said: “Sales have fallen, and price rises are showing signs of slowing. There’s the chance that as the panicked rush subsides, prices will weaken.
“However, underlying demand from people who want to change their lifestyle, boosted by extraordinarily low mortgage interest rates, isn’t going anywhere in a hurry. It means there’s every chance of a soft landing as we head into the autumn.”
Anna Clare Harper, CEO of property consultancy SPI Capital, had a different take on the situation but still thought the market wouldn’t decline.
She said: “Interest rates (and therefore mortgage repayments) remain very low, especially for homeowners, so it’s unlikely that we see a widespread sell-off any time soon.
“Transactions are likely to slow down, because many homeowners won’t need to sell. This means an ongoing shortage of housing stock, which in turn means prices are expected to continue to grow.”
