A report issued by HMRC today highlights that 105,630 homes were purchased October. This represents a monthly increase of 9.8 percent from September when 96,180 properties were sold, and a rise of 8.1 percent compared against the same time last year, when there were 99,560 residential sales completions.
What’s also reassuring is to look at how well overall the residential property market has fared despite the otherwise troubled economic outlook. HMRC’s figures show that 797,990 homes have been purchased in the UK so far in 2020.
Although that’s lower than usually expected, with the total number of purchases usually around 1.1 million per year, that’s far healthier than some analysts predicted at the start of the Covid crisis in the spring.
It’s also interesting to compare where we are now with the last black swan financial event. In 2009, which is widely acknowledged as the worst year for the UK property market during the Credit Crunch, a total of 847,750 homes were purchased according to previous HMRC records.
Given that it’s highly likely November and December this year will possibly see similar, if not higher, transaction levels than last month, it’s reasonable to conclude that we could reach around one million homes sold in 2020, which rather puts the current market sentiment into context.
As Jeremy Leaf, former RICS residential chairman explained: “Transactions are always a more reliable indicator of market strength than volatile house prices and these figures confirm what we have been seeing lately.
"The prospect of an end to the pandemic has been a shot in the arm for the market, resulting in buyers trying to take advantage of the stamp duty holiday and make sure their move completes before the end of next March."
Jeremy continued: “Looking forward, we don’t expect too much of a change and many of the buyers who may lose out on the stamp duty discount because they don’t complete in time have already told us they intend to try to renegotiate and share the saving with their sellers."
Marc von Grundherr Director of London estate agency chain Benham and Reeves is more upbeat about the mid-term outlook and observed: “There’s no doubt that the reopening of the property market and the stamp duty holiday caused a huge influx on buyer demand.
"However, it’s only really now that this demand is starting to translate into a full return to health where actual transactions are concerned.
"This is, of course, due to the lagged nature of the property selling process and so this positive health report is really just the start of what should be a steep increase in transaction volumes over the coming months.”
Managing Director of Enness Global Mortgages Hugh Wade-Jones agreed, and said: “The property market is continuing to build momentum at a rapid pace and this is despite efforts by some lenders to stifle this market activity by reducing their range of products for first-time buyers, in particular, over the last few months.”
Hugh concluded: “There has been such an overwhelming demand in recent months that the sector has struggled to keep pace and as a result, logjams have formed with many left in limbo as they wait for their sale to complete.
"However, as the industry works to shift this backlog it does mean a consistently high level of transactions will be seen over the coming months.
"It’s taken just six months for the market to recover from pandemic-induced paralysis and we expect to see transactions continue to climb for many months to come.”