UK Property Transactions Fall by 63% in July, But Demand Remains High
Statistics from HMRC have revealed that July saw the first drop in property transactions for 2021, falling by 63% compared to the year before.
While the year-to-date has seen record-breaking rises for the market – both in property prices and average rental prices – activity dipped last month.
This drop followed an impressive performance throughout June, where the number of property transactions doubled compared to June 2020. HMRC has attributed this surge in transactions to changes in the Stamp Duty holiday, with buyers wanting to complete before the nil rate band dropped to £250,000 on 1st July 2021.
A similar peak in transactions was recorded in March 2021, where 174,080 sales were completed in a single month in an attempt to benefit from the full Stamp Duty holiday savings.
It should be noted, however, that while July recorded significantly less property transactions with 73,740, the overall number of residential sales in the UK market for Q2 2021 marks the best performing Q2 since the introduction of these statistics in 2005.
In highlighting the impact of the Stamp Duty holiday, this questions whether the next fall in property transactions will coincide with the next changes in October 2021.
Aligning with this drop in transactions, the average UK property price has also seen a decline. In causing a consistent surge in demand since July 2020, the Stamp Duty holiday has since pushed prices to new heights, but as activity cooled in July 2021, the average UK property price fell by £1,076 (-0.3%).
The overall fall in this figure was predominantly driven by decreased activity in the upper-end of the market, with four-bedroom-plus properties seeing a £4.699 (0.8%) decline in the month. Coinciding with the effect on property transactions, Rightmove pinpointed the changes in the Stamp Duty threshold and an absence of bigger savings as the cause of this decline.
Although the upper-end of the property market saw a drop, first-time properties and second-stepper properties have seen an increase in demand, and subsequently, an increase in value. First-time homes coming onto the market rose by £1,328 (+0.6%) in the month, bringing the average price for first-time buyers to £208,714 – an annual change of almost +4%.
This demographic is largely buying smaller properties – i.e those with two or three bedrooms – demonstrating the demand that is still in the market, especially for second-steppers or investment properties.
Likewise, the value of second-stepper homes increased by around £975 in July, raising the average property price for this demographic to around £309,643.
Tim Bannister, Rightmove’s Director of Property Data, comments: “Our analysis shows that average prices have only fallen in the upper-end sector, which is usually more affected by seasonal factors such as the summer holidays and has also seen the greatest withdrawal of Stamp Duty incentives.
“The mass-market of properties that cater for first-time buyers and second-steppers is still seeing high demand and upwards price pressure leading to new record high average prices in those sectors.”
Despite the slight drop in both property transactions and the overall average for UK prices, experts remain hopeful for an ‘Autumn bounce’. In comparison to August 2019 statistics, demand is up 56% and is just 17% lower than it was during the post-lockdown boom last year. As a result, Rightmove is anticipating a rise in both prices and buyer activity in the coming weeks and months.