The latest figures released by HMRC have revealed that UK residential property transactions reached 114,940 in May - a 3.9% dip against the previous month, but still 138.2% higher than May 2020.
When non-seasonally adjusted, transactions totalled 103,100 and were 123.4% higher than May 2020 and down 8.7% against April 2021.
Anna Clare Harper, CEO of property consultancy SPI Capital, had this to say: "HMRC’s latest data shows further growth in housing transactions of 138.2% since May 2020, though transactions were 3.9% lower than April 2021. That transactions are booming relative to last year, and gradually slowing down seems unsurprising. What is interesting is the causes and implications for housing transactions and prices going forward.
"The boom in housing transactions has arguably been directly caused by the pandemic and policies around it, rather than happening despite Covid-19. Specifically, housing transactions and prices were egged on by the temporary stamp duty reduction designed to fuel the housing market amidst the pandemic, lockdown-led upsizing and a flight to safer assets.
"A surge in demand, shown by the transactions data, against restricted supply, has created house price growth.
"So what next? What property owners, business owners and policymakers care about is what happens to values and, as a result, confidence. The tapering down of the temporary stamp duty reduction has begun, leading some to fear a housing market crash.
"At the same time, construction is getting harder and more expensive, and the supply of existing stock is constrained. This means that despite transactions slowing down, house prices are likely to remain strong, although growth rates will slow.
"For existing property owners, this is great news. But for younger generations and those who don’t own property but want to, it’s more bad news."
Sam Mitchell, CEO of online estate agent Strike, commented: “Despite property transactions easing in May for the second month in a row, numbers remain well above pre-pandemic levels with buyers and sellers scrambling to complete before the stamp duty holiday deadline at the end of this month.
“Now with only days left until the stamp duty holiday deadline, we expect property transactions to skyrocket, similar to the frenzy we witnessed in March before the original deadline. Some may be expecting a drop after the stamp duty holiday has come to an end, but with the tapering off period until October and the Government’s lending scheme combined with low interest rates, there are still plenty of factors to keep the market bubbling into the Autumn.
“Plus, with the extension of lockdown restrictions announced last week, buyers will no doubt still be considering a home that matches their new lifestyle, whether that’s somewhere with more green space or perhaps closer to family.”
Jonathan Sealey, CEO at specialist lender Hope Capital, said: “There has been a significant drop in the level of residential transactions in both April and May, which was to be expected following the frenzy of activity we saw up until the end of March.
“Having said that, despite the fall in May, it was still the busiest May for transactions since 2014 and still way above pre-pandemic levels.
“A certain amount of cooling off and a return to less frantic levels of activity is likely to be welcomed by some quarters of the sector. However, we anticipate June will produce a further increase as homebuyers push to get over the line before the extended SDLT holiday deadline.
“But, as we hopefully reach the end of lockdown, it’s important that the sector works together to get through the volume of work, and that brokers explore all options for funding such as specialist finance, in order to deliver on the deal.”