By Legal Futures Associate Search Acumen
HMRC’s property transactions data for August 2022:
- Seasonally adjusted estimate of UK residential transactions volumes in August 2022 are 7.6% higher than August 2021
- This is 1.1% higher than the previous month of July 2022
Andy Sommerville, Director at property data and insight firm Search Acumen said:
“Today’s transaction figures from HMRC show that property transaction levels remain elevated compared with pre-pandemic levels, which is a reflection of robust and sustained demand, despite cost-of-living pressures facing many households across the country.
“However, these statistics are overshadowed by the prospect of a stamp duty cut in the Government’s mini-Budget on Friday. We saw what the stamp duty holiday did to the market during the pandemic, and I have no doubt such a move will stimulate demand again. I don’t think market activity will reach anywhere near the same dramatic peaks as it did in 2021, not least because available housing stock is extremely low, which puts a natural cap on how far transaction volumes can rise. But, without supply-side reforms to boost housing stock, stimulating demand will mean more buyers bidding for the same number of properties, which can only mean one thing for house prices.
“While many buyers who might have given up on homeownership will be buoyed by an SDLT cut, we need to be careful that stimulating demand, unchecked by measures to boost housing stock, doesn’t create an affordability crisis of runaway house prices, immediately following one of the most incredible periods of price growth in modern history. We also need to be careful that buyers who take advantage now, don’t find their housing costs become unaffordable in years to come. Interest rates historically have averaged more than 4% and we’re expecting another rate rise from the Bank of England tomorrow, so buyers do need to be aware that savings they make today through SDLT may be cancelled out through elevated mortgage repayments in years to come due to elevated house prices and borrowing rate rises.
“For conveyancers, an SDLT cut cements a new normal for the sector and, if this policy is revealed on Friday, caseloads will continue to remain high by historic standards; more likely than not, they will get larger as buyers look to take advantage of SDLT relief over the coming months. Our latest research shows that 2021/22 was the busiest financial year on record for the conveyancing sector and while we might not reach those heights again given the unique circumstances at play, the market dynamics and direction of Government policy indicate we are in for a period of sustained market activity. This should provide clear impetus for law firms to re-evaluate their operations, and look for ways to utilise readily available technological solutions to relieve caseload pressures, reduce transaction times and increase profitability.”