Property market continues to slow down

Wed, 24 May 2017

Property market continues to slow down
House sales fell in April as the property market shows further evidence of slowing down.

As well as the lower number of house sales, there was also a significant drop in the number of people taking out mortgages.

According to HM Revenue and Customs (HMRC), the number of property transactions dropped by around 22.5 per cent between March and April.

Data firm Equifax have also released analysis which suggests that there was a 16 per cent decline in the number of mortgages sales over that same period.

However, it is worth remembering that these figures have been altered somewhat by the tax changes seen over the last year or so.

In April of last year, landlords became liable for a higher rate of stamp duty, and as of last month they were unable to claim as much in tax relief on mortgage interest payments.

These changes meant that the market felt a boost in both March 2016 and March 2017, and as a result the number of house sells dropped from 107,090 in March to 83,010 in April.

The effect of the changes was to boost sales in March 2016 and March 2017.

With certain seasonal factors being taken into consideration, property transactions fell by 3.2 per cent.

Despite the fall, some commentators have said the figures represent the progress and strength of the market.

"At first glance, one might think these figures are hugely disappointing, but when you consider what was happening this time last year and what has happened to property transactions in the past few months, they represent steady progress for the housing market," said Jeremy Leaf, a London estate agent.

There was a particular drop in the number of landlords taking out mortgages last month, with Equifax saying that sales fell by 20.4 per cent to £2.15bn.

However it was not only landlords remaining inactive in the market, with regular mortgage sales also dropping by 15.1 per cent.

"Mortgage figures have nosedived following a strong first quarter, with every single region experiencing a notable slump in sales," said John Driscoll, director at Equifax Touchstone.

"Government measures to cool buy-to-let property sales, including the phased cuts to mortgage interest tax relief which started on 1 April, have no doubt played a role in diminishing sales figures last month."
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