The latest figures from HMRC on UK property transactions do not make for particularly pleasant reading. Despite many industry stakeholders and commentators continuing to push the message that the government’s interventions in the market have only dampened activity, it appears not to resonate with the power brokers and policy makers, and thus we are left pondering what might happen next, especially when a certain country leaves a certain European institution.
It’s fair to say that I don’t think anyone would describe the UK’s housing market as ‘hot’ at present. Despite the baking heat we’re all coping with – hosepipe ban anyone? – it’s only the weather that appears to be scorching, and given the potential impact this could have on housing market activity during the summer months, we could be looking at a serious drop-off over the course of the rest of the year.
First up, what are the figures? Well, HMRC said that in June this year, the number of residential property transactions was 96,340, that’s a 3% drop on the previous month, and if you review the seasonally adjusted figures, a 5.7% fall from June 2017.
The reasons behind this drop are many and varied but (in no particular order) you might care to review: the lack of housing supply, developers sitting on land, the price of houses, the lack of affordable homes, the impact on the stamp duty increases on landlords, the overall cost of stamp duty and moving in general, the lack of ‘next step’ properties, those in later life not downsizing, the leasehold homes scandal, a government fixation on first-time buyers and new build – the list goes on.
All these add up to a market which is making it far more difficult to purchase and move in, and when you consider the whole raison d’être of the housing market is to ensure people can purchase, then you have to wonder why you’d introduce policies which have done the exact opposite?
The other point to make is that the outlook, specifically in the short-term, does not look any rosier. These summer months (and the heat) are unlikely to generate a greater interest in purchasing property – if you were looking to move prior to the start of the school year in September, for example, then you’ve definitely left it too late in July and August.
The main catalyst now is to be moved by Christmas but, given what we know about the housing market and the process of purchasing, this would need to be beginning right now. Again, with this weather, are we likely to see more people viewing properties and putting in offers now, or might they instead just decide to wait it out? And, lest we forget the Brexit word – if you are in any way concerned about what happens next, then might you instead decide to leave sleeping dogs lie a while, rather than making the biggest purchase of your life in a time of such political and (perhaps) economic upheaval?
This should come as no surprise to those who have been following these matters. Conveyancing firms, and the Conveyancing Association in particular, have been warning about a drop-off in transactions for 12-18 months – clearly, a large number of buy-to-let purchases have gone because of the impact of the stamp duty/tax relief measures on landlords. And in the residential space, with house prices at current levels and ongoing mortgage affordability issues for some, there simply isn’t the opportunity for many people to move. Plus there are large numbers of people who could move, but don’t actually think they can.
I don’t wish to be a doom-monger but unless we have some significant, positive government intervention, or we miraculously increase housing supply within a space of months, then these types of transaction figures will be the norm for the foreseeable future. The sad thing is that, I suspect, until the government see its stamp duty tax take drop off a cliff, nothing will really get done. In a way we could all be holding on until November’s Budget and even then it would be wise not to hold your breath for major positive change.
It could therefore be a case of battening down the hatches while we await change, so let’s hope that the remortgage market continues to outperform, or the market will feel even tighter than it does now.
Harpal Singh is managing director of Broker Conveyancing