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Property: Cheap mortgages lift UK housing transactions to decade-high

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UK housing transactions reach highest levels in a decade, despite end of stamp duty holiday, with house prices rising.
HMRC estimated that there were 106,150 non-seasonally adjusted UK residential transactions in August. Photo: PA

Cheap mortgages and a continued migration due to new coronavirus housing preferences continued to power the UK housing market in August, as transactions headed upwards yet again. 

Despite the end of the stamp duty holiday, and the fact that August is usually a quiet month, HMRC estimated that there were 106,150 non-seasonally adjusted UK residential transactions last month, close to levels recorded prior to the coronavirus pandemic. 

This is 24.8% higher than a year earlier and an improvement from the previous month, when sales had dropped by over two-thirds.

In August 2019 transactions were 111,600. 

The data showed that the total for UK residential transactions is the highest for the period between April and August during the previous 10 financial years, partially due to the burst in activity before the end of the stamp duty holiday.

Availability of mortgages for first-time buyers is spurring on the market. 

"Before the pandemic, you’d have been hard pressed to find a mainstream mortgage lender to lend more than 4.5 times a typical first-time buyer’s income," said Jamie Thompson of Manchester-based Jamie Thompson Mortgages.

"Today, a first-time buyer can borrow up to 5.5 times their income with a mainstream high street lender. This allows them to massively increase what they can bid on their first house, which not only drives transaction volumes but also supports prices.”

Read more: UK property listings fall as market cools

Transaction data also showed that the provisional seasonally adjusted estimate of UK residential transactions in August 2021 was 98,300 — 20.8% higher than August 2020 and 32.0% higher than July 2021. 

Non-seasonally adjusted and seasonally adjusted UK residential property transactions by month between August 2018 and August 2021, in thousand transactions. Chart: UK Government
Non-seasonally adjusted and seasonally adjusted UK residential property transactions by month between August 2018 and August 2021, in thousand transactions. Chart: UK government

"We expect to see another spike in transactions in September, one last stamp duty holiday hurrah before an autumn lull as the market catches up with the transactions which have been pulled forward by the stamp duty holiday," said Anthony Codling, CEO at twindig.

Read more: End of stamp duty holiday hits UK mortgage approvals 

As transactions have kept up pace, property stock has fallen in the UK and the pipeline may be slowing. The latest RICS residential housing survey showed that property agents saw another fall in new homes listed on the market. 

New buyer enquiries also fell for the second month in a row, with a net balance of -14% of respondents saying they had seen even fewer house hunters (following a -9% reading in July).

Agreed sales also declined at the same time — with a net balance of -18% reporting a fall.

The latest Halifax Price Index also showed that average house prices headed higher again in August, with the cost of a property increasing by 0.7% or £1,789 ($2,477).

Back-to-back monthly price gains have now pushed the cost of a typical home to a record of £262,954, topping the previous high of £261,642 recorded in May this year.

Watch: House prices stage surprise surge despite stamp duty holiday drawing to a close

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