Property transactions 20% lower compared with the same period last year, data reveals

New data from HM Revenue & Customs has revealed the number of UK residential property transactions in December 2023 was 20% lower than the same month in 2022.

The provisional non-seasonally adjusted estimate of the number of UK residential transactions in December 2023 is 85,820, 20% lower than December 2022 and 2% lower than November 2023.

Looking at the same data on a seasonally adjusted basis, HMRC said that transactions in December 2023 is 10,030, 3% higher than December 2022 and 3% higher than November 2023.

Commenting on the data, Nathan Emerson CEO Propertymark said:

“A drop in transactions at the end of the year is a usual seasonal trend but coupled with rising costs and in turn, consumer confidence taking a dip – it’s inevitable that this figure will be slightly lower than usual. However, we are seeing promising signs in the housing market as serious buyers remain active and with interest rates remaining static, affordability is improving. Propertymark now hope to see drops to inflation and the UK Government looking beyond just cutting inflation to restore confidence to the housing market. They must make it their mission this year to implement policies that can lead to a housebuilding boom and make homes more affordable.” 

Adam Oldfield, chief revenue officer at Phoebus Software, added:

“In contrast to the more upbeat figures for mortgage approvals from the Bank of England yesterday, the latest residential transaction numbers are once again lower than the number of approvals would have us to believe.  Of course, when it comes to transactions the timeline has to be considered.  When most of these mortgages were approved in August or September, we were looking at a very different scenario.  The base rate was still going up as were mortgage rates and inflation.  If we look at the current number of approvals the outlook for the next few months is brighter than the picture painted by today’s figures.

Of course, there is the question of what the Bank of England will do next.  No-one expects rates to come down quite yet and, as we have seen, swap rates have started to climb again recently. Lenders have been bringing rates down with better fixed rate deals back on the table.  How long that will be the case is a big question and brokers will need to work quickly to secure the best deals for their clients, especially those that have moved onto much higher variable rates.”

Maria Harris, chair of the Open Property Data Association said, however, many mortgage holders are “still rolling off historically low rates” and there is “continued pressure on employment and household spending”. She continued:

“Housing transaction volumes rely heavily on consumer confidence so challenges to affordability mean further bumps in home moving activity levels. Having accurate and trustable data about our property has never been more important to restore confidence and create certainty on transactions.”

John Phillips, CEO of Spicerhaart and Just Mortgages, said that despite the recent inflation scare, there are “many positive indicators” for the market and the year ahead. He continued:

“There’s no question potential buyers are beginning to respond to this and find some confidence. Whether they can find the affordability to match is another matter, and another reason why advice is so essential. There’s no doubt that affordability will continue to be a big factor this year. If brokers have ever needed a reminder to be proactive and remain visible in their local area, this is certainly it.”

Andy Sommerville, Director at Search Acumen, added

“The latest HMRC figures indicate that residential property transactions fell for the fourth consecutive month in December 2023, down 1% from November.

“We have seen a persistently challenging market in recent months as the property sector continues to cool under the pressure of high inflation and rising interest rates. Having said this, Christmas is always a slow month with fewer transactions historically, so underwhelming numbers are not necessarily an accurate reflection of market conditions. Looking at the year-on-year data, we can see some signs of the market stabilising after the initial shock of rapidly rising rates.

“Overall, these figures reflect an uncertain economic environment where households and businesses remain wary and with good reason. Sustained growth will require not just macroeconomic improvement, but better leveraging of technology and data to enable smarter, faster transactions. Innovation is not just a nice-to-have, but an essential component to the recovery of the market. Integrating solutions like AI could dramatically streamline processes and reduce costs, contributing to a stronger outlook for 2024.”

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