Number of transactions rebounds from sluggish April but could be feeling pre-referendum chill

There were 84,300 transactions for homes worth more than £40,000 in May according to HMRC, up by just short of 10,000 from April.

The number of transactions is still significantly behind last May, which some are blaming on the upcoming EU membership referendum. However the effect of the referendum may be less than is evident due to the more obvious impact of the stamp duty hike on second homes. There were more transactions in May than April and May combined.

Non-residential transactions have been largely unaffected, with 10,260 listed by HMRC, down marginally on the 10,310 listed in April, and significantly up on the 8,970 recorded in May 2015.

Doug Crawford, CEO of My Home Move, said: ” The residential property market remains subdued following a seasonally adjusted 1.4% increase in the number of transactions between April and May. The latest figures show that sales are still struggling to equalise following the surge in transactions pre-Stamp Duty deadline, alongside a slip in consumer confidence caused by the forthcoming Referendum vote.

“The looming EU referendum means would-be buyers and sellers are keen to avoid any uncertainties caused by a surprise outcome. However, in the mid to long-term we expect the market to bounce back. Ultimately, high levels of demand for both rental and owner-occupied accommodation will drive transaction figures upwards, with our recently published forecast predicting the number of property transactions will rise by 7% this year and by 20% by 2020.”

Andy Sommerville, director of Search Acumen, said: “We were expecting this dip in transactions after the artificial spike engineered by the rush to beat the stamp duty hike on second homes and buy to let properties in March. That, together with the fact that transactions in total for the past three months are higher than the year before, means there is little reason to fret.

“The property market is slowing its pace, but with the referendum less than 72 hours away, it’s understandable that buyers are cautious with their nest eggs and where to put them.”

“A shortage in housing supply remains the real elephant in the room, which will continue to limit the number of property transactions. It’s not just first time buyers who need help up the property ladder, but it’s increasingly clear that second steppers are also having a hard time as the price of houses outpaces the price of flats.

“Some people are waiting to see what happens on Thursday, but despite the uncertainty asking prices don’t appear to be dropping. The ultimate solution – building more houses – continues to stare us in the face, Brexit or no Brexit.”

Today's Conveyancer