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Property developer blames the South for 2019 house sales slump

The South was mostly to blame for the slump in UK property market sales following the aborted March Brexit deadline, new analysis by property developer Southern Grove has found.

Detailed analysis from the latest Land Registry data shows that while UK residential sales volumes began to collapse on an annual basis in May after a ‘Brexit wobble’, most areas of the UK saw an increase in the number of homes sold in that time.

The slump in sales prices first began showing in June’s HMRC figures, which found that sales volumes had dropped 11.3% in the 12 months to May 2019 as homeowners and buyers postponed their plans upon Britain’s planned exit from the EU on March 29.

Analysis has shown that of 406 local authority areas in the UK, 168 saw transactions fall between May 2018 and May 2019 – 104 of these paces were in the South. The collapse in the year-on-year sales later worsened, reaching a 16.5% fall in June and 12.4% drop in July before largely recovering in August.

The worst-affected areas included North Dorset (-35.4%), Harrogate (-33.9%) and East Cambridgeshire (-29.6%).

Housing developer Southern Grove believes the slowdown was exacerbated by unrealistic vendors and costly stamp duty.

On the other end of the scale, Wales saw sales volumes climb 5.3% on average in the year to May 2019, with nine of 22 local authority areas seeing declines. In England, transactions rose by 2.9% on average but fell annually in 157 of 352 areas. Scotland, however, saw just two of 32 local authorities fall in sales and the entire country actually recorded a 20.5% rise in transactions.

Andrew Southern, chairman of Southern Grove, comments: “This is an eye-opening dissection of a collapse in sales that was clearly weighted towards the South. It’s a region that has seen huge price growth over the past five years so it’s no accident.”

“Homeowners in more expensive areas clearly felt it was better to ride out the storm, as any subsequent purchase would carry a hefty stamp duty bill at a time when they couldn’t be confident property values would be bulletproof in the medium term.”

He says in this situation, it is natural to wait and see what happens. High valuations ‘give homeowners a taste for the piggy bank they think their home has become’ and they are often wary of doing anything that can jeopardise that peak valuation.

“It’s in this type of market that the hammer blow of stamp duty is most unhelpful. It’s a tax so punitive as to be totally counterproductive,” Southern concludes.

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