House transactions in the UK dipped to its lowest level since the end of last year in April, but levels still remain higher than two years ago, new figures by the taxman show.
Some 99,910 homes exchanged hands in April – 3,310 fewer than the previous month and the lowest number since December last year, according to the latest figures by the HM Revenue.
Transaction levels were also lower on a quarterly, unadjusted basis, with some 291,710 recorded transactions in the first three months of the year compared to 306,360 between October and December last year.
House transactions: Some 3,310 fewer homes exchanged hands in April compared to March
Transaction figures are key to understanding what is happening in the housing market as they show how many people are actually moving.
A lack of supply of homes for sale and increasingly unaffordable prices have contributed to a slowdown in the housing market in recent months.
April’s figures were 20 per cent higher than the same month last year, but the HMRC said this comparison should be avoided. That’s because of the introduction of higher stamp duty in April last year, which saw many buyers bringing their purchase forward to March to avoid the higher tax.
In fact, March 2016 saw the highest number of transactions in the last ten years at 169,440, HMRC data shows. In 2008, just after the financial crash, property transactions were around 53,000 a month.
Brian Murphy, head of lending for Mortgage Advice Bureau, said the decline between March and April was normal and in line with seasonal expectations and that we are not witnessing an ‘election effect’.
Decrease: Housing transactions declined by just over 3 per cent between March and April
HMRC data shows that transaction levels to date in 2017 are up by 5.5 per cent on the same period in 2015 (354,290 in total versus 334,750) which was a comparable period, given that there was a General Election in May 2015.
There was also a decrease in transactions between March and April in 2015 and between March and April last year too, stamp duty anomaly aside.
Murphy added: ‘One could suggest that the decrease in transactions between March 2017 and April 2017 are normal, and in line with usual seasonal expectations, but furthermore, given that we are still seeing a paucity of stock in many areas of the country, coupled with the ongoing economic climate and political developments, one might observe that with overall transaction numbers for the year to date up on the same period for 2015, the housing market in the UK remains steady, with consumer confidence unfaltering in bricks and mortar.’
He also noted the full impact of the General Election announcement in April won’t be seen in the figures until the June data is released as April property completions would mainly be as a result of transactions started in March.
‘But as a snapshot of overall confidence in the UK housing market, it would appear to be that, for the moment at least, the situation remains normal and indeed, perhaps healthier than where we were in 2015, which was also an Election Year,’ he added.
Jeremy Duncombe, director of Legal & General Mortgage Club, said: ‘For the most part, property transactions have remained flat in recent times, as a lack of suitable housing stifles the market and pushes up property prices.
‘As a result, the next generation of homeowners is still struggling to make that first step onto the ladder amid a housing market that is characterised by a supply-demand crisis.’
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said that despite April’s monthly decline, the figures suggest some resilience.
‘At first glance one might think these figures are hugely disappointing but when you consider what was happening this time last year and what has happened to property transactions in the past few months, they represent steady progress for the housing market.’
He added: ‘What the HMRC figures do show is the huge impact that changes to stamp duty can have, not just on property transactions but the wider economy bearing in mind how many people are dependent in other trades on people moving home.’
HMRC figures add to other recent data indicating that the housing market is softening. House prices fell £1,000 a month, with annual property inflation also continuing to slow, according to recent ONS figures.
The average property price was £216,000 in March 2017 and despite the monthly drop, house prices are still 4.1 per cent higher than a year ago – a difference of £9,000. However, a month earlier, annual house inflation was a far higher 5.6 per cent.