Property transactions bounced back in August but are still far short of the levels seen last year, according to the latest government data.
The provisional seasonally adjusted estimate of UK residential transactions in August 2020 is 81,280, 16.3% lower than August 2019 and 15.6% higher than July 2020.
The provisional non-seasonally adjusted estimate of UK residential transactions in August 2020 is 84,910, 23.9% lower than August 2019 and 6.1% higher than July 2020.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Despite only being introduced the previous month, the stamp duty holiday was already filtering through to transaction numbers in August as buyers rushed to take advantage of the saving. Despite the recovery in number of transactions compared with the previous month, the pandemic has had a significant impact on the market with August’s numbers down significantly on last year’s.
“The data illustrates just how long it takes for property transactions to complete and at the moment, with some lenders struggling with service levels, along with surveyors and lawyers, it is all taking longer than it usually would.
“Buyers need to be patient, as well as engage good advisers who can help steer the transaction through in as prompt a fashion as possible.”
The provisional non-seasonally adjusted estimate of UK residential transactions in August 2020 is 84,910, 23.9% lower than August 2019 and 6.1% higher than July 2020.
Residential transactions decreased significantly in April 2020, reflecting impacts from coronavirus and public health measures in response. Provisional transactions have since gradually increased month-on-month, but are still below levels observed in recent years.
The provisional 2020 Quarter 2 residential transactions total was the lowest quarterly total since 2009 Quarter 1.
Anna Clare Harper, CEO of asset manager SPI Capital and author of Strategic Property Investing, said: “The increase in transactions reflects the release of pent-up demand and supply, the impact of the temporary stamp duty change, and the wide availability of capital, with low interest rates and effective quantitative easing via government stimulus.
“It’s worth noting that transactions were significantly down (-23.9%) compared with August 2019 data, with year to date transactions down from c. 500,000 to c. 300,000.
“The data is buoyed up by home buyers seeking houses to live in, for the most part. By contrast, investor sentiment is – for the time being – more measured. Institutional investors in particular tend to be nervous about the future in times of change, leaving the way open for private investors to snap up deals.
“What happens next will be defined by two major factors: economic confidence and policy. With the prospect of further change to come, for example, in the form of Capital Gains Tax reform and through Brexit, it is an exciting time in the property market. For investors, it is becoming increasingly important to understand both the bigger picture and local variations.”
Mike Scott, Chief Analyst at estate agency Yopa, added: “The market is now reported to be very active, with the stamp duty holiday spurring interest, buyers and sellers making up for lost time, and a large number of sales being agreed. We therefore expect the monthly numbers of sales to go above the previous year’s figures before the end of 2020, but there isn’t enough time to make up for all the sales lost earlier in the year, so the total for 2020 is certain to be well down on recent years.
“We expect to see fewer than 1.1 million sales completing this year, whereas the number was more like 1.2 million in every year from 2014 to 2019. This is still significantly better than experts anticipated back in April, when the housing market was closed during the lockdown.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Transactions are a better barometer of market health than more volatile house prices. Although a little historic, and there is a delay between the point when the sale is agreed and completion, these numbers still demonstrate considerable resilience when we were emerging from the previous lockdown and before the stamp duty holiday could have much impact.
“On the ground, we have noticed no sign of sales collapsing, renegotiating on deals or price reductions in the past few days – more of a determination to carry on.”
Joshua Elash, director of property lender MT Finance, concluded: “The significant rise in house sales in August compared with the previous month reflects a positive response to the Chancellor’s stamp duty initiative in the short term but sadly, it is not sustainable.
“With the ongoing threat of further and more serious lockdowns looming, combined with the end of the furlough scheme in coming weeks, this may represent the peak of transactional activity before what will be an unpleasant fall in the final quarter of the year.”
