transactions dip slightly but market shows resilience
Latest figures from HMRC reveal a 3 per cent dip in house sales in December compared with November, while numbers were down just 1 per cent on December 2021. The seasonally-adjusted estimate of the number of UK residential transactions was 101,920 in December 2022, slightly higher than pre-pandemic levels.
While transaction levels were slightly weaker in December compared with the rest of the year, this is partly to be expected as we return to a more seasonally-driven market. Overall, transactions proved to be relatively consistent over the year – an encouraging indication as to the state of the British property market with buyers still pushing through transactions and sales.
Other surveys suggest that house-price growth is starting to slow, and indeed prices are falling in some parts of the country. Halifax’s latest index reveals that the average house price fell by 1.5 per cent in December, although this was lower than the 2.4 per cent drop seen in November (and one must always be careful when talking about an ‘average’ price as this can mask significant regional differences). But whereas house prices might be slightly down and completion times are taking slightly longer, many buyers are still looking to proceed with their purchase in order to take advantage of pre-agreed mortgages with lower rates, which were secured earlier on in the year.
prices versus transactions
There has been much speculation about property prices and whether they will fall significantly this year but what is more important when measuring the health of the housing market is transaction numbers. The big question is whether rising interest rates will prevent buyers and sellers from being able to transact this year. While transaction levels seem to be holding up for now, how they will look in a couple of months’ time could be very different, due to higher mortgage rates and possibly fewer buyers prepared to pull the trigger. While those who need to move will get on and do it regardless, those who have more discretion may wait and see until the picture for interest rates and mortgage pricing is clearer.
The good news is that while another base rate rise is expected next month, we could be nearing the peak as the annual rate of inflation continues to ease. Meanwhile, fixed-rate mortgage pricing continues to ease as Swap rates edge downwards following the shock of the ill-fated mini-Budget and lenders compete for business.
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