In August, property worth £390m were sold at auctions, yielding 8.4% less than the £426m raised in the same month last year.
Lots offered and lots sold both fell 6% and 8.5% respectively during the month, with the UK-wide residential sector seeing 5.5% fewer homes (3,160) being offered and 8.3% fewer (2,289) being bought.
In the whole of Q3, residential properties put up for sale were down 3.1%, while sales were down 6.8%, with only people in the east Midlands and north west home counties buying more houses in the quarter than last year.
However, over the whole year activity was up: 27,888 homes were put up at auction (up 2.8% on last year) and 21,069 homes were being bought (up 2.4%).
The amount raised from the auctions was also up: £3.27bn compared with £3.03bn last year.
What caused the summer dip?
Positive Lending managing director Chris Fairfax said it could be a number of things from uncertainty caused by Brexit to changes in taxation, and incoming stricter underwriting requirements from the Prudential Regulation Authority, which many lenders have already adopted.
“All of those issues are going to exacerbate profitability and likely capital growth of investment property,” he said. “The vast majority of auction properties are for an investment. Buy to let is most affected in terms of the availability of capital.”
However, he suggested it could also be that the property market is “more liquid” and more houses are sold privately. For instance, recent research by the Council of Mortgage Lenders showed mortgages for first-time buyers were on the rise.
The government introduced an additional 3% tax on second homes in April in an attempt to protect home buyers from a growing buy-to-let market. It also announced cuts to the amount buy-to-let landlords can claim in tax relief.
Centrado director Mel Fordham said: “ In my opinion this has nothing to do with Brexit or the general economy or any form of uncertainty, it’s solely a [product of] the Stamp Duty increases.”
Fordham said the effects were making many purchases “unpalatable”. He recently saw a purchase fall through on a £300,000 house because taxes, fees and charges had exceeded £22,000, he said.
And there is no hope in sight unless the rules change, he added. “It will create stagnation also because landlords won’t sell when they are being adversely affected by the tax. I can see stagnation for the foreseeable future while this Stamp Duty is in place.”