House sales plunged by 52.0% month-on-month in October after a stamp duty holiday ended, figures from HM Revenue and Customs (HMRC) show.
An estimated 76,930 transactions took place across the UK last month, which was 28.2% lower than October 2020 and 52.0% down compared with September 2021.
HMRC said the “impacts from forestalling are particularly evident in England”.
Forestalling happens when action is taken in advance to prevent an anticipated event. In this case, it refers to buyers snapping up homes before the stamp duty holiday in England and Northern Ireland ended on September 30.
House sales plummeted by 50% year-on-year in April and May 2020 due to the impacts of the coronavirus pandemic.
The temporary stamp duty holiday was unveiled in summer last year, and transactions hit peaks this year in March, June and September.
Despite the recent sales dip, around 842,250 residential transactions have taken place across the UK during this financial year so far – marking the highest total in the past decade.
Sam Mitchell, CEO of online estate agent Strike, said: “Property transactions cooled in October after the flurry of activity around September’s stamp duty holiday deadline.”
Anna Clare Harper, chief executive of property consultancy SPI Capital, said: “We can expect a general slowdown in housing transactions, but a significant reduction in house prices is unlikely.”
She added: “Perhaps the biggest problem the housing market faces going forward is the shortage of available stock, which means that even as housing transactions fall, prices are likely to remain strong.”
Paul Stockwell, chief commercial officer at Gatehouse Bank, said: “With the (stamp duty) tax incentive now completely removed, we’ll see the back of these peaks and troughs as transactions settle into a more consistent pattern.”
Karen Noye, mortgage expert at wealth management firm Quilter, said: “The latest ONS (Office for National Statistics) UK house price index showed a record high average UK house price of £270,000 in September, £28,000 higher than the same time last year.
“While prices still seem to be on the up, the huge drop in property transactions may well begin to nudge over-inflated house prices back down over the coming months.”
But Mike Scott, chief analyst at estate agency Yopa, said: “Since the number of homes for sale remains very low, this activity will continue to push prices upwards.”