The UK housing market is set to record more transactions than last year despite buyers being “hampered” by higher mortgage rates and a cost of living crisis.
Estate agency eXp UK analysed how annual property transactions and GDP have risen and fallen since 2005. It is expected there will be an estimated 920,000 transactions in 2023, 1.3% more than the 909,000 recorded in 2022. However that total is still below the average between 2005 and 2022, which stands at 991,000.
The analysis reflects the fluctuation in the property market; since 2005 the highest years in terms of GDP growth are 2014 (3.2%), 2021 (7.6%) and 2022 (4.1%). The lowest are the financial crisis-affected years of 2008 (-0.2%), 2009 (-4.5%), and 2020 (-11.0%) when the market was impacted by pandemic. The transaction count in the three lowest years are on average 36.6% lower than the three highest.
According to eXP UK, while 2023 is unlikely to go down as a “brilliant year,” transaction volumes are still set to be in positive territory, as GDP growth is expected to reach 0.4% according to a forecast by the IMF.
Transaction volumes peaked before the financial crisis, at 1.5 million in 2006 and 1.43 million in 2007, before plunging to just 744,000 in 2008. They stayed at a relatively low level until 2014, when they broke the 1 million barrier again, reaching 1.06 million, staying around the same level until 2020, when the pandemic saw them fall back to 832,000.
Activity rebounded in 2021 with the help of government measures like the stamp duty holiday, as there were 1.14 million transactions, before they dropped to 909,000 in 2022.
Head of eXp UK, Adam Day, commented:
“The market is performing steadily despite all the negative talk about housing and the economy, as despite high mortgage rates and affordability troubles it is estimated that there could be more transactions than last year.
After years of low mortgage rates, increases were always likely to bite hard, so in that context 2023 looks to be a year where the markets weather the storm. It’s far from the best year when it comes to both GDP growth and transactions, but it’s not armageddon.”
