Based on the seasonally adjusted data for May, HMRC suggests that property transactions dropped by 6.4 per cent between April and May, and by 11.3 per cent on an annual basis. For context however, it’s worth remembering that May completions are usually the result of deals agreed in February, or even early March. Back then of course, we still believed that we’d be leaving the EU on March 31st, so it wouldn’t be a huge stretch to suggest that some would-be buyers decided to ‘wait and see’ until after Brexit day before committing to a purchase. That being the case, it’s relatively straightforward to conclude that nervous movers in some parts of the UK earlier in the year would lead to a lower than expected number of completions last month.
Does this mean that it’s time to batten down the hatches?
Mike Scott, Chief Property Analyst at Yopa remains optimistic for the moment, suggesting that, “Other indicators such as the number of mortgage approvals are still showing a healthy level of activity.
“This may reflect a temporary slowdown in the number of sales agreed in the immediate run-up to the original Brexit deadline at the end of March, which has now carried through to fewer sale completions.”
Mike continues, “We still expect that the number of homes sold in 2019 as a whole will be the same as in each of the previous five years, at around 1.2 million, since market activity generally recovers quickly from such short-term political events.”
Tomer Aboody, director of property lender MT Finance also cites political uncertainty as a key factor for the current market malaise, along with additional stamp duty charges for those purchasing investment properties or second homes.
Observing how these factors, combined with other challenges, are potentially slowing down the market and creating a shortage of properties for sale.
Tomer comments: “While stamp duty hikes slowed the market down as expected, they failed to result in a big uplift in first-time buyers as they continue to face affordability issues.
“With this back drop, developers are reluctant to push forward with developments, preferring to sit on plots with planning until they can see a convincing upturn.”
Jeremy Leaf, former RICS residential chairman, is pragmatic about the latest figures, suggesting that “This month’s numbers reflect weakness in the market at a time when we might have expected more strength”.
Jeremy adds, “However, the seasonal nature of the market makes spotting short-term trends difficult. Irrespective of Brexit, let’s hope the fall in the number of transactions and their impact on the wider economy is near the top of the new prime minister’s agenda.”
Which raises a rather tantalising question. If, as expected, Boris ascends to Downing Street next month, could – or perhaps more distinctly would – a resulting ‘feel good’ factor give more home movers confidence to transact, despite any concerns about Brexit?
It’s certainly possible, as the market tends to respond well in situations where a more popular leader replaces one who suffers from lower approval ratings.
In previous years when there has been a change of premiership to an individual who is more warmly received by voters, historic data appears to suggest that this has made a positive impact on buyer and seller confidence in the weeks and months afterwards.
However, we won’t know until October or November at the very earliest, when deals agreed over the summer will complete, as to whether a ‘Boris Bounce’ will be evident or conversely, as many suspect we’ll see a continuation of the current Brexit bottleneck until the beginning of 2020.
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