Residential property transactions in the UK fell in May, with buying and selling over the next few months likely to decline further as the stamp duty holiday ends.
There were 114,940 residential real estate transactions in May, according to ONS figures, around 3.9% less than in April 2021.
House prices exploded last year due to the introduction of the stamp duty holiday, but with the end of the incentive program at the end of this month, it is increasingly clear that the real estate market slows down.
Imran Hussain, director of Nottingham-based independent mortgage broker Harmony Financial Services, said transaction levels in June and July are expected to decline further.
“Unsurprisingly, the main driver of real estate transactions in May and the months leading up to it was the stamp duty holiday,” he said.
“The transaction levels in June and July are likely to decrease as the incentive to May has been removed, but many people are now buying for pandemic-induced lifestyle reasons as much as to save on stamp duty,” so there will be no cliff-edge drop.
The latest figures from RightMove showed house prices rose by around £ 2,500 in June, a relatively modest increase of 0.8% from previous months, which the real estate website said was a a sign that the current hectic housing market is slowing down.
“Without a doubt, the stamp duty relief has resulted in the high volumes of real estate transactions,” said Ashley Thomas, director of London-based mortgage broker Magni Finance.
“Overall, I would expect the next few months to drop significantly. That said, for high value properties, we have seen an increase in inquiries from high net worth clients overseas.
“With the restrictions easing completely over the next few months, I believe the demand for blue chip properties will continue to increase. Stamp duty relief does not make a significant difference for this demographic.
Robert Payne, co-founder of Bristol-based Langley House Mortages, added: “Opportunistic buyers have naturally dominated the market in response to government support programs, and this, of course, has eased as we we are getting closer to the June deadline.
“Despite this, volumes are still high as we see a shift in demand towards those who buy cheaper properties, benefiting from reduced stamp duty relief until September, and those who are still eligible for support from the government, such as the first buyers. “