8:01 AM, 23rd November 2022, About 10 months ago
The number of UK house transactions increased by 2% in October to reach a seasonally adjusted total of 108,480, HMRC reports, though these figures do not reflect the market chaos seen after the Government’s mini-Budget.
That rise is compared with September’s figure, and the annual increase is 38%.
HMRC says its provisional seasonally adjusted estimate only covers transactions in October that had been agreed ‘weeks or months’ before the mortgage rates increased.
That’s when Kwasi Kwarteng’s tax-cutting mini-Budget in September led to international debt markets spiralling but this was turned around by Jeremy Hunt’s Autumn Statement last week.
Also, the data only considers those completed property transactions worth at least £40,000.
Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “Transactions are the key barometer of property market health – more significant than volatile house prices.
“These numbers demonstrate clearly a determination of some to take advantage of existing mortgage offers although they do reflect activity in the previous three or four months at least.”
Mark Harris, the chief executive of mortgage broker SPF Private Clients, said: “Transaction numbers are holding up as buyers with good mortgage offers are keen to complete before they expire.
“There is good news for borrowers as Swap rates continue their decline, resulting in several lenders repricing their fixed-rate mortgages.
“We now have five-year fixes starting with a 4, rather than a 6, and would expect them to go below 4 per cent by the spring as the cost of funds falls, servicing pressure subsides, and lenders attempt to originate new business.”
Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, said: “We know buyer demand continued to fall, and that in the aftermath of the mini-Budget in September and October, it fell through the floor.
“It’s not a huge shock. Buyers faced the horror of mortgage rates spiking overnight, and while the average two-year fix has since come down to 6.21%, according to Moneyfacts, it’s still a different world for buyers.”
She added: “Meanwhile, they have the spectre of falling house prices to consider.
“It means buyers face the prospect of spending more than they can afford on a property that will get less and less valuable over the next two years.
“It also means that over the next two months, property sales figures will head south, and not just for the winter. We could see sluggish sales settle in for the duration of the recession.”
Tomer Aboody, a director of property lender MT Finance, said: “Transaction numbers have slightly increased and are in line with previous years, Covid aside.
“This demonstrates the resilience of the market, as buyers push through purchases using mortgages with lower rates, agreed earlier on in the year.
“Although the next couple of years will be difficult and there is likely to be a slowdown in the market, the current long-term horizon looks brighter as Swap rates are coming in slightly under 4%.”
Avinav Nigam, co-founder of real estate investment platform, IMMO, said: “Housing transactions drive house prices, and are a helpful indicator of how well the economy is doing.
“Since a large amount of national wealth is represented by residential real estate, housing transactions both reflect and affect confidence.”
He added: “Transactions were 32% lower this month than September 2021, which is partly a return to normality, since this time last year transactions were booming.
“There is also a preference among those with the option to take their time to ‘wait and see’, holding off home moves, investments or sales for later.”