House sales tumbled by more than half during the first few weeks after the end of the UK’s stamp duty holiday, leading to the quietest October property market for almost a decade.
After a record surge in activity earlier in the year, transactions slumped by 52% in a month to reach 76,930 in October after thousands of homebuyers rushed to complete their purchases and beat the government’s end-of-September stamp duty holiday deadline.
HM Revenue and Customs, which published the new data, said UK house sales in October were also 28% lower than in the same month last year.
HMRC said that after “significant forestalling activity” by homebuyers in September, there had been “an expected but noticeable decrease” in sales the following month. Forestalling is when advanced action is taken to prevent an anticipated event – in this case, the phasing-out of the stamp duty holiday. The threshold at which the tax begins returned to its pre-pandemic level of £125,000 on 1 October.
While last month was the slowest October since 2012, according to HMRC, other measures of the market – in particular, the various house price surveys – depict a market continuing to fire on all cylinders.
Halifax said earlier this month that UK house prices rose for a fourth month running in October, adding 0.9% to the average cost of a home and taking the typical figure above £270,000 for the first time on its measure. The rival lender Nationwide said property values increased by 0.7% in October, which meant the price of the average property had gone up by more than £30,000 since the coronavirus pandemic began in March 2020.
The HMRC data underlines the rollercoaster nature of the housing market during the past 18 months or more. It revealed that house sales in the second quarter of 2021 hit their highest quarter-two level since official records began to be compiled in this way in 2005, and also hit their highest total for any three-month period since 2007.
The figures prompted many commentators to predict that the market was heading for a winter “hibernation”.
Sarah Coles, a personal finance analyst at the investment company Hargreaves Lansdown, said: “Property sales plummeted in October, but … we always see drops like this after the end of a tax break, and we tend to see buyers hunker down for winter, so the combination of the two was always going to mean a quieter few months.”
She added: “The monthly drop looks spectacular, as sales almost halved, but this was from an enormous peak created by the final stamp duty holiday deadline. A major chunk of sales we would otherwise have expected this winter were rushed through in time for the deadline at the end of September.”
One factor that may have kept house prices buoyant is the reported shortage of homes for sale. Earlier this month, the Royal Institution of Chartered Surveyors said that “a lack of new properties being listed for sale continues to drive house prices up”.
It added that despite a rise in the number of new buyer inquiries, estate agents currently only had 37 properties on their books on average.