UK residential property transactions fell in May, with buying and selling in the coming months likely to reduce further as the stamp duty holiday ends.
There were 114,940 residential property transactions in May, according to ONS figures, some 3.9 per cent lower than in April 2021.
House prices have boomed in the last year due to the introduction of the stamp duty holiday, but with the incentive scheme coming to an end at the end of this month, there is growing evidence the property market is slowing.
Imran Hussain, director of Nottingham-based independent mortgage broker Harmony Financial Services, said transaction levels in June and July are likely to reduce further.
“Unsurprisingly, the main driver of property transactions in May and the months leading up to it has been the stamp duty holiday,” he said.
“Transaction levels in June and July are likely to reduce as the incentive for may has been removed but equally many people are now buying for pandemic-induced lifestyle reasons as much as the change to save on stamp duty, so there will be no cliff-edge drop.”
The latest figures from RightMove showed property prices increased in June by around £2,500, a relatively modest rise of 0.8 per cent compared with previous months, which the property site said was a sign the current hectic housing market is slowing.
“Without doubt, the stamp duty relief has driven the strong property transaction volumes,” said Ashley Thomas, director of London-based mortgage broker Magni Finance.
“Overall, I would expect the next few months to drop off significantly. That said, for high value properties, we have seen an increase in enquiries from high net worth clients abroad.
“With the restrictions fully easing in the next few months, I think demand for prime property will continue to increase. The stamp duty relief doesn’t make a significant difference for this demographic.”
Bristol-based Langley House Mortages co-founder Robert Payne added: “Opportunistic buyers have understandably dominated the market in response to government support schemes, and this, of course, has tailed off as we draw closer to the June deadline.
“Despite this, volumes are still high as we see a shift in demand towards those buying cheaper properties, benefiting from reduced stamp duty relief until September, and those who are still eligible for government support such as first-time buyers.”