Earlier this month, we published a blog that focussed on the housing market slowdown – and it seems that there is more bad news in store for the sector.
According to a report by HMRC, the number of residential property transactions in the UK dropped by 22.5% between March and April. This figure is supported by data firm Equifax, which revealed mortgage sales had declined by 16% in the same period. Halifax and Nationwide have also reported that average house prices fell in April.
It is thought that the cause relates back to the changes implemented by the government over the past year or so, which has impacted on sales of property. Second home owners now have to pay a higher rate of stamp duty on their property purchases and, since last month, they will be able to claim less relief on mortgage interest payments. This latest measure will hit profit margins particularly hard and it is little surprise that the housing market is now feeling the full force.
Whilst these changes were introduced as a way of hopefully stimulating the property market, even encouraging more first time buyers to the front of the queue, it has actually had the opposite effect. HMRC has reported that the number of sales fell from 107,090 in March to 83,101 in April.
It’s true that some seasonal factors should be taken into consideration, but even then, the net figure has still fallen by 3.2%. The number of landlords taking out mortgages last month took a particularly large hit, with sales falling 20.4% - equivalent to £2.15bn. Ordinary buyers too, as mortgage sales dropped 15.1%.
Whilst it appears that the figures are on a downward spiral, there could be some hope. Compared to the housing figures for March and April 2016, there seems to be some steady progress. Also, these figures shouldn’t be looked at in isolation, and we would need to look at a more comprehensive sales pattern over at least a three month period to determine the true impact.
If you have any questions relating to property, residential or commercial, then DMH Stallard’s real estate team can help.