Homemovers not put off by interest rate hikes as Land Registry data shows boost in transactions during August
Suggestions of an imminent downturn are beginning to unwind as UK residential property transactions soared once again in August 2022, despite successive interest rate rises over previous months making borrowing more expensive.
According to the latest data from HM Land Registry (HMLR), the provisional non-seasonally adjusted estimate of UK residential transactions in August was 114,440.
This number is a striking 4.4% month-on-month rise from July, as well as being 9.7% higher than levels seen a year earlier in August 2021.
What’s more, this figure represents an elevated position when compared to pre-pandemic levels – transactions in August 2022 were 2.5% higher than the 111,600 seen in August 2019.
“We are several months into the cost of living crisis and whilst we appreciate that housing transactions completed in August were berthed earlier in the year, the fact that so many people are choosing to see their purchase through to completion in the face of the rising cost of living and mortgage rates is testament to the strength of the underlying housing market”, said Anthony Codling, CEO of twindig. “Budgets might be being stretched, but it appears that when it comes to our homes, our biggest assets, we are not yet ready to call time on moving home,” he added.
Simon McCulloch, Chief Commercial & Growth Officer at Smoove, said the figures “confirm that the market remains stable and active”. He continued:
“This may be due to people aiming to move home, and lock in fixed rate mortgages, before interest rates rise any further. Nevertheless, negative sentiment around economic conditions is likely to impact transaction volumes in the medium term. This should be balanced against the lack of available housing stock, which should continue to prop up prices. If the government goes ahead with stamp duty reform, we may see transactions and prices tick up significantly.”
“Once again the figures from HMRC show that the market continues to perform well. A good sign in the face of everything that is going on both here and across the world,” said Richard Pike, chief sales and marketing officer at Phoebus Software. He added:
“This will be a pivotal week economically with interest rates expected to rise by another 0.5%, or even 0.75%, and the mini budget on Friday anticipated to include measures to not only ease the pressure on finances but also to reduce stamp duty – a move that could guarantee the current momentum continues.”
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, said:
“House sales held up in August, as the usual seasonal rush endured, despite dwindling supplies and rising pressures on buyers. However, concerns for the future continue to mount.
Sales completing in August were largely agreed in April and May, when the pain of energy price rises was already being felt. On the one hand, this is a clear indication that those who have enough cash to see them through this crisis are still prepared to dig deep for property. On the other, it’s still early days. We know that demand only really started to fall from May when people had time to adjust to their new outgoings, and reconsider a move up the property ladder. At the same point, agents started to report that buyers were getting increasingly cautious, so we can expect some of this to show in the figures as we move into the autumn.
The very fact that we’re hearing reports that the government is considering a Stamp Duty holiday is a sign that they are worried. We will have to wait to see whether this comes to fruition. If it does, we don’t know whether it will effectively stimulate demand or whether we have stamp duty holiday fatigue at this stage. If it does encourage more buyers into the market, with an average of 36 properties on each agent’s books, we’re still close to an all-time low in the availability of property for sale. Driving demand without addressing supply would risk more buyers chasing a tiny number of properties, which would push prices up. This would mean higher monthly mortgage costs, which in itself could be enough to put buyers off. So if life continues to get increasingly expensive, a Stamp Duty holiday wouldn’t necessarily be enough to stop the housing market slowing significantly.”
Join nearly 5,000 other conveyancers – sign up to our newsletter
