Spicerhaart boss Paul Smith has called the top of the housing market, saying there is “trouble in paradise”.
The market, he said, peaked in April. He is the first mainstream, or indeed any, agent to state the claim, which was clarified by EYE in a series of emails yesterday.
He made the remark after HMRC announced a huge slump in housing transactions.
Based on evidence from his own haart network, Smith said that buyer demand slumped by 46% last month, and warned that current house prices are unsustainable.
Smith said: “We believe the nation has now neared the limit in terms of price rises.
“Our data is already showing a slowdown in both house price growth and transaction levels.
“In order to maintain healthy sales levels, sellers need to be much more realistic with their asking prices. Properties are in danger of being over-valued and these homes will struggle to sell.
“They could also be at risk of lenders refusing to grant high LTV mortgage applications based on these too high valuations.”
While spokespeople for Smith initially argued that his remarks did not mean he was calling the top of the market, later EYE was told that Smith said that EYE could accurately state his view that the market peaked last month.
Housing commentator Henry Pryor called the top of the market at the end of last month, having successfully called it in 2007.
Meanwhile residential property sales fell hard in April, right across the UK, and on both a monthly and an annual basis, according to HMRC.
Even the best efforts of “seasonal adjustment” could only disguise some of the extent of the fall: the annual drop was 14.5% when seasonally adjusted, and 18.7% when not.
The monthly fall was 45.2% when seasonally adjusted, and 59.2% when not.
While the monthly fall was much bigger than the annual drop, it is perhaps the annual drop that is the more significant: last April, the market slowed as the general election approached, while this year the housing market was slower still, with the EU referendum two months away.
Nor can the huge monthly fall be blamed only on property investors putting a brake on buying second homes ahead of the Stamp Duty deadline.
Last month, there were 60,080 housing transactions in England, compared with 73,700 in April last year; in Scotland there were 6,250, down from 8,050; in Wales there were 3,070, down from 3,800; and in Northern Ireland there were 1,290, compared with 1,610.
The UK total of 70,690 “actual” transactions for April compared with 86,970 in April last year.
On a monthly basis, the figures are starker: 60,080 transactions in England during April, compared with 151,870 in March; 6,250 in Scotland, down from 11,100; 3,070 in Wales, down from 7,120; and in Northern Ireland 1,290 in April, compared with 3,340 in March.
The UK total of 70,690 for April compares with 173,430 transactions in March.
The figures are from HMRC which observed: “The large increase in transactions for March 2016 followed by the substantial reduction in April is likely to be associated with the introduction of the higher rates on additional properties in April 2016.
“However, whilst April 2016 is lower than April 2015, it should be noted that the total for March and April 2016 is still substantially higher than the corresponding period last year.”
The Council of Mortgage Lenders last week reported that mortgage lending fell 29% between March and April.
* HMRC reported record revenue in April, received in Stamp Duty Land Tax from March’s transactions, of £1.2bn – the most ever received in a single month.