Housing activity dropped off considerably in July after the minimum stamp duty threshold moved from £500,000 to £250,000.
Some 61.5% fewer homes changed hands in July, at 82,100 compared to 213,120 the month before, statistics from the HMRC show.
More homes changed hands compared to the year before (1.8%), but the number is still lower than usually seen in July.
Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “Property sales tumbled almost two thirds in July, after the stamp duty holiday deadline passed.
“It demonstrates the powerful psychological impact the tax break had, which went way beyond the actual cash buyers could save.
“Property sales had climbed quickly from record lows when the market reopened in May 2020, but growth had tapered off by the time the stamp duty holiday was announced that July.
“From that point on, as sales filtered through, they started climbing way above their usual levels, to reach record highs in the month before the tax break tapered.”
Andy Sommerville, director at Search Acumen, predicted that the market to rebound in Autumn.
He said: “After the mad rush to beat the Stamp Duty Land Tax holiday deadline at the end of June, there was always going to be a drop off in activity over the summer months and we’ve seen that play out in today’s figures with transactions down by almost two thirds in the space of one month.
“However, while this may provide a welcome opportunity for the conveyancing sector to draw breath, we expect this to be relatively short-lived.
“The phasing out of tax incentives might bring transaction numbers down from their record highs for a short period, but the market will continue to be fuelled by buyers who need to adapt to lasting societal changes in the post-pandemic world.
“It is therefore likely transaction numbers will rise again in the Autumn when people are back from holiday and have had a few months to assess what their working and living arrangements might look like long term.”
The next stamp duty holiday deadline is at the end of September, after which the minimum threshold will move from £250,000 to £125,000.
Tomer Aboody, director of property lender MT Finance, said: “’What this trend tells us is that stamp duty is a barrier which significantly impacts the market.
“Something needs to be done to adjust this so that more properties come to market, perhaps its removal or adjustment for downsizers in future.”