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Residential property transactions fall 18 per cent year on year – HMRC

  • 21/03/2023
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Residential property transactions fall 18 per cent year on year – HMRC
Seasonally adjusted residential transactions came to 90,340 in February, an 18 per cent year-on-year fall compared to last year and four per cent down on January.

HMRC said that figures were also down on pre-pandemic figures with seasonally adjusted residential property transactions coming to 142,460 in February 2021 and 97,290 in February 2020.

It added that seasonally adjusted residential property transactions “appear depressed, indicating a slowing of the housing market”.

HMRC noted that UK residential transaction have been generally stable over the past few months but transactions were starting to decline.

It continued that at the tail-end of last year, mortgage and interest rates had increased and the impact of those changes were starting to become apparent.


Housing market has performed ‘better than expected’

John Phillips, national operations director at Just Mortgages said that the non-seasonally adjusted figures showed that the housing market had performed “better than expected”.

He explained that although February’s transactions may have fallen in comparison to last year, going down 18 per cent to 76,290, but this was two per cent higher than January 2023’s figures (on a non-seasonally adjsted basis).

“We seem obsessed in this country with talking down the housing market, but house prices are up, mortgage rates are falling and our brokers across the country are reporting an increase in enquiries.

“Lending policy has been tightened as a result of pressures on household budgets and there will certainly be a payment shock for those borrowers coming of a fixed rate this year, but professional brokers can still find a great deal for their clients,” he explained.

Philips said that there could be an “unexpected boost” for borrowers if the Bank of England decides to curb its decision to raise interest rates again due to “uncertainty in the global banking sector”.

“Brokers need to ramp up their marketing activity and let existing and new borrowers know that professional help is widely available and easily accessible,” he noted.

‘Good levels of activity’ will feed through in coming months

Rhys Schofield, managing director at Peak Mortgages and Protection, agreed with the positive sentiment, noting that there were “currently good levels of activity that will feed through into the data in the months ahead.”

“Don’t read too much into this data as things have improved dramatically over the past two months or so,” he noted.

Tomer Aboody, director of property lender MT Finance, added that a “downturn in transactions” due to higher mortgage rates “isn’t a surprise, as buyers and sellers decided to pause due to ever changing and mostly increasing mortgage rates towards the end of 2022”.

He added: “As rates are stabilising, we should see an uptick in sales. Putting it all into perspective, transactions are at a similar number to pre-pandemic levels, highlighting how the housing market spiked through and after Covid, with eager buyers looking to move and an extremely low interest rate environment.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, continued that transaction numbers had fallen year-on-year mainly due to mortgage rates.

“After years of little movement in rates, borrowers are becoming accustomed to volatility in the mortgage market, with the chance of a hold in base rate at the next Bank of England meeting now more likely on the back of recent turmoil in the banking industry.

Swap rates, which underpin the pricing of fixed-rate mortgages, have started falling again, and a number of high-profile lenders have reduced fixed rates, including Santander, which is launching a sub-four per cent five-year fix,” he said.

Harris said that borrowers could be “tempted to wait for rates to fall further” but there was a “danger that they might not and trying to predict interest rates can be a dangerous game”.

“Seeking advice from a whole-of-market broker as to the options available is crucial,” he noted.

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