Anna comments on the increase in residential property transactions

With thanks to Metro, Daily Mail, Property Reporter, Yahoo Finance, LBC and MSN money for publishing my comments on the increase in residential property transactions reported by HMRC yesterday.
The increase in residential property transactions – 34.2% higher than December 2019 and 14.0% higher than November 2020 – is seen as good news for the property market. It reflects positive forces that are applying uniquely to the housing market at this time.
In April and May, under strict lockdown, transactions were down by about 50% compared with the same time the previous year.
Residential transactions in December 2020 are at their highest level for the month of December in 10 years, although year to date figures are at a 9 year low.
These figures represent a recovery rather than a boom. Right now, property transactions are being encouraged by the temporary Stamp Duty Land Tax reduction. We are also seeing the release of pent up demand and supply from earlier in the year, when it was very difficult to buy to sell a property.
Transactions have been dominated by second time buyers, typically trading up to improve their surroundings, rather than first time buyers ‘getting a foot on the ladder’.
Residential transactions data highlight that the fundamental drivers of value in residential property remain strong: our homes have never been so important as in lockdown. Regardless of uncertainties in the economy, we all need a roof over our heads.
Non-residential transactions have also picked up, and were at their highest monthly level for over 10 years as owners and buyers come to understand what the ‘new normal’ means for businesses and investors in terms of income and value. That said, year to date transactions remain their lowest in 10 years.
So what next?
Anecdotally, we’ve received a spike in enquiries from commercial property investors keen to invest in the residential sector, in pursuit of lower volatility. As a result, over the 2020s I expect continued growth in residential property prices, although the pace of growth will slow down when the temporary SDLT reduction ends.
However, the volume of transactions may not increase, because of the larger scale of these new investors, means that transactions are likely to be larger scale: blocks of flats rather than individual units.