Property sales on the rise according to HMRC: is this really the case?

According to HMRC, property sales are on the rise. But do these stats tell us the full story about the number of homes for sale?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

estate agent welcoming a couple to house viewing

Image source: Getty Images

New government data suggests that property sales in December 2021 were substantially higher than in the previous month.

But if you dig deeper into the stats, it’s possible to come to the conclusion that, in reality, the number of property sales may actually be declining. Here’s why.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

[top_pitch]

What did the data reveal about the UK housing market?

According to HMRC, property sales were 11.8% higher in December than they were in November. Despite this, the number of sales was 14.6% lower than the same time in 2020.

HMRC also says December 2021 was officially the third busiest for property sales over the last 10 years.

Meanwhile, in no other year over the past decade have property sales been higher than in the current tax year. This is a remarkable statistic given the 2021/22 tax year still has more than two months left to run!

What can we read into these stats?

Alongside its report, HMRC points out that the huge 14.6% year-on-year decrease should be taken ‘with caution’. That’s because the higher number of sales reported in December 2020 was likely a result of the Stamp Duty holiday.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, echoes this point and considers the December 2021 figure as an outlier. She explains: “Property sales continued to bounce back in December, but there’s every chance this is a temporary blip.

“Over the previous two months, sales had been recovering from the lows of October, climbing slightly above the kind of levels we usually see in December. However, the lag in these figures means they reflect sentiment before talk of rate rises started in earnest, so this bounce isn’t guaranteed to take off.”

Coles also claims that the Stamp Duty holiday may have helped to skew the figures for December 2021 too. That’s because the tax cut wasn’t fully wound down until September last year.

“October was always going to be a real low because so many people hurried a sale through to take advantage of the tax break that finished at the end of September. The recovery in the two months to December sees a return to stronger levels of transactions.”

Coles goes on to highlight how HMRC’s figures refer to ‘completed transactions’. This means the data doesn’t really show the true number of sales. 

She explains: “… these figures measure completed transactions, so there’s a lag between people’s decision to buy and when they feed into these statistics – about two to three months later. We know that agreed sales have been dropping for months, so there’s a good chance this will manifest itself in lower completion numbers over the next few months.”

[middle_pitch]

How can fewer property sales impact UK house prices?

Should we see fewer property transactions in 2022, there will be fewer homes on the market.

This will make it harder for buyers to find a property and likely help to increase house prices. As Sarah Coles explains: “The shortage of houses doesn’t just make it harder to buy, it’s also pushing prices up, with early indications from the commercial indices that prices hit a record high in December.

“[This situation] puts buyers in the miserable position of having to pay a huge premium for a home that they’ve had to settle for, which is going to put some of them off.”

Higher house prices won’t be welcomed by budding buyers of course. That’s because UK house prices are already at record levels.

According to the ONS’ latest housing index, the average home in the UK now costs £271,000. As a result, those hoping to get on (or move up) the property ladder this year will hope the number of properties for sale increases. If not, then 2022 could prove to be another nightmarish year for wannabe homeowners. 

Are you looking to buy a home? See The Motley Fool’s top-rated mortgage deals.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »