But is Theresa May’s Brexit delay to blame? And could new PM Boris Johnson turn the fortunes of the UK property market around in time for a late summer surge? The data, released by HMRC yesterday, suggests that completed transaction levels dropped off considerably over the last month, despite lending figures recently suggesting that the number of mortgage approvals for property purchases remained steady. This has led some in the industry to suggest that buyers who are purchasing without a mortgage, potentially those downsizing, for example, decided to put a hold on their plans after the delay of the UK’s withdrawal from the EU was announced in March.
The data suggests that the number of mass-market purchases of homes with mortgages hasn’t changed much, and therefore there has been a very sharp decrease in the number of homes bought for cash
Mike Scott, Chief Property Analyst at online estate Yopa explained: “These figures are hard to reconcile with data from UK Finance showing little change in the number of mortgages completed in May, when compared with May 2018.
“Taken together, the data suggests that the number of mass-market purchases of homes with mortgages hasn’t changed much, and therefore there has been a very sharp decrease in the number of homes bought for cash, which tend to involve buyers who are not in chains and have no pressing need to move, letting them delay their purchase.”
Mike continued: “The most likely explanation is that the uncertainty of the impending Brexit deadline caused home-buyers, especially cash buyers, to hold back from agreeing purchases in the first three weeks of March, before an extension was agreed, and that these delayed sales would otherwise have gone on to complete in May or June.
“We therefore expect that the year-on-year comparison will start to improve in the July figures, and will be fully recovered by the autumn, at least until we start to see the effects of the new October deadline around the end of the year.”
However, Tomer Aboody, director of property lender MT Finance, doesn’t seem quite as positive about the short-term outlook, and suggested: “The fall off in transactions compared with this time last year is astonishing.
House prices UK: Sales fell in June thanks to Brexit delays
“Some transactions are happening, but the volumes are not there as people can’t afford to move. Affordability is an issue, coupled with uncertainty around Brexit, which is having a significant impact on people’s lives and decisions about whether to move or not.”
Tomer went on to say: “The government needs to do a lot more to stimulate the housing market. There is a knock-on effect; if people are moving, whether at the top or the bottom of the market, it helps everyone else.
“Hopefully, the announcement of a new prime minister who has declared that he wants to reform stamp duty will have the desired effect of helping get transactions back to steady growth, which is good for everyone.”
But with 99 days left until the 31st October, which by Boris Johnson’s own admission is ‘do or die’ day in terms of leaving the EU either with or without a deal, how do the movers and shakers of the property industry view the new administration in terms of changing the fortunes of the UK housing market?
Iain McKenzie, CEO, The Guild of Property Professionals suggested that as far as housing is concerned, there’s a rather full in-tray for Mr Johnson to get to work on.
House prices UK: Could Boris Johnson’s housing policies bring positive news to the market?
“I am in favour of anyone who is going to improve sentiment or confidence in the housing market,” Iain said. “Current economic data is strong, but the uncertainty of Brexit has caused stagnation in the market.
“Mr Johnson’s commitment to ‘deliver Brexit’ on 31st October with a new ‘can do’ spirit is therefore very much welcomed. Going forward with Boris as Prime Minister, I would also welcome any positive move on stamp duty or the additional taxes on landlords.”
Director of London estate agent Benham and Reeves, Marc von Grundherr, added: “A new prime minister and a clean slate can bring a rejuvenated air of confidence to the UK housing market but while Boris does have a fairly good track record when it comes to housing, he’s probably not the steady hand on the tiller that many would have liked.
“He has put his stake in the ground with a number of announcements around the UK housing market but with his plate already rather full, it’s unlikely that any of these will ever come to fruition.”
Marc concluded: “The only reassuring thing is, that despite the absolute spectacle that Brexit has become, the housing market remains resolute and for those with concerns over our new prime minister, you might even go as far to say that it’s ‘Bojo proof’.”
House prices UK: Cash buyers, such as those downsizing, have dropped
As for the long-debated subject of Stamp Duty reform, Nick Leeming, Chairman of Jackson-Stops, appears circumspect, saying that “Prohibitive stamp duty charges have long been a challenge for those on all rungs of the property ladder, and so both buyers and sellers will now be eagerly awaiting confirmation from Mr Johnson and his party on how he decides to address this.”
Nick continued: “Should Boris decide only to switch stamp duty liabilities from the house buyer to the seller this will do little to improve the overall market.
“Buyers will look at the combined cost of a property purchase before deciding how much they should bid for it.”
With the new Cabinet being announced imminently, the appointment of the new Chancellor and Housing Secretary will be key factors in terms of any changes to housing policy.
But as the removal vans assist Boris into his new abode in Downing Street over the next few days, and a pressing Brexit deadline takes priority in his schedule, how and when he’ll be able to help thousands of other would-be home movers in the UK over the next few months remains to be seen.
Follow Louisa on Twitter: @louisafletcher