UK residential sales slightly drop by 0.9% after Brexit vote

Residential property sales in the UK fell slightly by 0.9% between June 2016 and July 2016 and were down 8.3% lower compared with the same period in 2015, according to the latest data from HMRC.

For July 2016 the number of non-adjusted residential transactions was about 0.7% higher compared with June 2016 and 13.6% lower than in July 2015.

The seasonally adjusted estimate of the number of non-residential property transactions decreased by 7.5% between June 2016 and July 2016 and was 1.7% lower compared with the same month last year.

The report points out that there was a large increase in transactions in March 2016 followed by a substantial reduction in April which was associated with the introduction of the higher stamp duty rates on additional properties in April 2016.

However, whilst April and May 2016 are lower than the corresponding months in 2015, it should be noted that the total for March to May 2016 is still substantially higher than the corresponding period last year.

Non-tax factors may have played a role as well, for example the Bank of England’s plans to curb buy to let mortgages resulting in a rush to purchase before April 2016, and the European Union referendum affecting transactions in recent months.

According to Andy Sommerville, director of Search Acumen, the statistics suggest the market is stabilising, as the month on month change sits at under 1%. ‘Many would have expected a sharp fall in transaction activity in what was the first full month in our post-referendum economy, yet an underwhelming change suggests the darkness in our market shows little sign of worsening,’ he said.

‘Despite the encouraging resilience the market has shown in the short term, the bigger picture reveals an 8.3% decrease in transactions since July last year, demonstrating the true hit we’ve taken from Brexit, combined with the underlying issue of affordability,’ he pointed out.

‘As our economy absorbs the shock of the past three months, it is positive that home buyers are being given a leg-up into the property market to reignite demand and boost our industry,’ he added.

Doug Crawford, chief executive officer of My Home Move, believes the data shows that the property market largely shook off the short term uncertainty of the Brexit vote.

‘Following the referendum there was talk that the market would be quickly affected by the outcome, but these fears have been allayed with residential transactions falling by just 0.9% month on month. While transaction levels remain lower than a year ago, this is in the context of a market that is still feeling the effects of changes to stamp duty, which led to a frontloaded first quarter,’ he explained.

‘The figures reflect our own experiences of the market. Following the referendum the vast majority of purchases went ahead without any issue, and chains were largely unaffected. In the medium term the market will remain stable, and our view is that it is strong enough to weather mild economic uncertainty,’ he said.

‘In the long term, strong fundamentals will continue to support a prosperous housing market. High levels of demand for both rental and owner occupied accommodation will drive transaction figures upwards, and our recently published forecast predicts the number of property transactions will rise by 20% by 2020,’ he added.

source: Property Wire