The rush to get property deals over the line before the stamp duty holiday ends on 31 March has been laid bare in new figures from HM Revenue & Customs today.
In December last year, the number of residential sales was over 30 per cent higher than during the same month back in 2019.
On a provisional seasonally adjusted basis, there were 129,400 residential sales completed in December, which is 13 per cent more than in November 2020.
The number of homes sold in the year as a whole was 1.04million, which is down 11.5 per cent from the 1.18million in 2019.
Festive rush: Property sales in December 2020 were over 30% higher than in December 2019
December 2020 was the first time since 2015 that December transactions topped the 100,00 mark, and last month marked the strongest December upturn in a decade.
With Christmas largely cancelled, buyers turned their attention to getting on with moving on to or up the property ladder over the festive period.
Tomer Aboody, director of property at MT Finance, said: ‘The biggest increase in transaction volumes comes when there’s a stamp duty change, when buyers are at their most active.
‘For years, high stamp duty has put the brakes on activity in the market.’
In the commercial property sector, HMRC said there were 10,470 completed sales in December, which is 4.5 per cent more than the previous year and 14.5 per cent higher than levels seen in November last year.
HMRC said the marked jump in residential sales is likely to reflect the continued release of pent-up demand within the property market since the start of lockdown in March, and, of course, Chancellor Rishi Sunak’s temporary stamp duty holiday.
Fluctuations: Property transaction levels across the UK since December 2019
Between April and December, 750,540 sales are estimated to have taken place, which is still lower overall than the 880,580 sales recorded in the same period a year earlier.
HMRC said the pandemic and stamp duty holiday had caused ‘significant uncertainties’ underlying seasonal trends, meaning its seasonally adjusted figures need to be approached with a degree of caution.
While the property market has been given the green light to stay open by the Government during the current lockdown, during the first lockdown in March this was not the case and the fallout in the sector was striking.
Residential property sales slumped by around 50 per cent in April and May last year, when compared to levels seen over the same period in 2019, HMRC said today. Commercial property transactions fell around 45 per cent year-on-year in April and May at the height of the first wave.
Historic figures: Property transaction levels in the UK since April 2005
The second quarter was particularly rough for the housing market, with residential transactions dropping to the lowest quarterly level seen since the first quarter of 2009, when the global financial crisis was in full swing.
Looking further back at what has happened to transaction levels over the years, HMRC said the’ unseasonal peak’ in March 2016 was caused by significantly increased residential transaction completions before the introduction of higher rates for additional homes from April 2016.
And, looking ahead, Mike Scott, an analyst at Yopa, said: ‘We expect that the market will remain very active in the first quarter of this year, with the number of sales peaking in March as buyers rush to beat the stamp duty deadline, and then slow down in the second quarter before recovering to normal levels in the second half of the year.
‘Slowdowns after previous stamp duty deadlines have been quite shallow and brief, and we expect the same to happen this time, especially since life will hopefully be returning to normal later in the year and moving house will be easier.’
Andrew Southern, chairman of property developer Southern Grove, said: ‘ The Chancellor will no doubt be hoping that a continued sales boom can help fill the hole in the taxman’s revenues but he’s got an impossible decision to make over whether to extend the stamp duty holiday or phase it out.
‘There’s an argument that any move like that could end up being a zero-sum game, with policy change designed to support the volume of sales making hardly any change to the tax take, or worse damaging it.
‘He’s damned if he does and he’s damned if he doesn’t, but this debate shouldn’t distract from the fact that SDLT is an outdated tax that should have been reformed long ago.’
Decision time: At present, it seems unlikely that the stamp duty holiday will be extended
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