Data shows heated market may continue beyond SDLT deadline
HMRC’s latest property data demonstrates just how heated the property market is as a result of the demand created by the SDLT holiday.
The latest figures, released today, show May transactions at their highest since 2014, with 103,100 estimated completions. The 392,860 transactions completed in the first quarter of 2021 is also the highest since quarter 3 2007.
May marks 12 months since the reopening of the property market on the 13th May 2020; with 2021 transactions 123.4% higher than 2020.
Property demand remains high with changing lifestyle still driving much of the activity. Rightmove’s own monthly House Price Index revealed that buyer demand continues to outstrip supply, and the market’s size is constrained until supply picks up again. The number of sales agreed by estate agents in May was 17% ahead of the comparable period of 2019, a slackening of the pace recorded in April when sales agreed were 45% higher than in April 2019 (2019 is the best comparison year since the market was effectively suspended until mid-May 2020).
The average number of properties available for sale per estate agency branch is at an all-time low of just 17, falling even further from the record low of 19 in the previous month. This chronic shortage of choice of property to buy means that the number of sales agreed is bound to diminish unless that supply is replaced. While the number of sellers coming to market picked up in March and April, this uptick in new supply has failed to continue in recent weeks, with the number of properties coming to market now down by 17% on the comparable period in 2019.
A recent survey commissioned by U-See Homes analysed UK homebuyers to have purchased a property within the last six months and found that 39% of them did so after just one viewing. A further 43% took just two viewings before deciding it was the right house for them, with just 12% of homebuyers returning for a third viewing and just 6% opting for four or more viewings.
The speed of the current viewing process isn’t confined to the number of viewings alone, with half of homebuyers (51%) taking just 30 minutes or less and a further 41% taking no more than an hour.
Tim Bannister, Rightmove’s Director of Property Data comments:
“Buyer demand remains very strong, though with an all-time low in the number of properties available for sale on estate agents’ books and new stock at higher than ever average prices, there are early signs of a slowing in the frenetic pace. Since the market re-opened last May in England we have seen huge jumps in the numbers of sales being agreed, but these are now rising at a slower pace.
Record low interest rates and stamp duty tax reliefs have helped many to afford higher prices, satisfying their pent-up desires for a new home fit for a new era. Some of that demand has now been met, and the phasing out of stamp duty reliefs has also taken away some of the urgency to move, though our high traffic and search data indicate that there is still strong buyer demand.
However, higher prices combined with a lack of fresh choice coming to market are reducing some buyers’ ability or desire to move, and while we expect the market to remain robust, there are early signs of a slackening in the incredible pace of activity that we’ve seen over the last year. This super-charged activity cannot go on forever, but we expect the market to remain vigorous for at least the remainder of the year.”
Commenting on the latest figures Andy Sommerville, Director at Search Acumen, says:
“The latest data from HMRC highlights the volatility of transactions ahead of the end of Stamp Duty holiday cut offs. This points to a lack of confidence from buyers that their purchases will complete in time to take advantage of the financial benefits on offer.
“Despite the monthly volatility, we can expect that demand in the property market will continue to be robust. Record low interest rates and Stamp Duty tax reliefs are two of the key reasons for the soaring demand and price growth we have witnessed in recent months.
“The pandemic has also led to a widespread desire to find new homes that offer more comfortable remote working environments. Given that flexible working is likely to continue, we can expect this trend to keep propelling demand forward for the rest of the year.
“The digitisation of the transaction process is more important than ever if the sector is to support sustained levels of demand. In particular, real estate lawyers have been under immense pressure given the high volumes of transactions. Many lawyers have embraced digital ways of working and this has delivered increased efficiencies to the transaction processes. However, we need a sector wide shift towards digitisation if we are to see a long-term transformation in not only the speed of transactions but also an improved service to buyers.”