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?

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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.

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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.”


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. 

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