HMRC transaction data from December suggests the scene could be set for a Bank of England interest rate reduction next week with the Money Policy Committee meeting on Thursday 6th February.
Housing transactions were up 7% in 2024 and are now only 2% below their five-year average run rate, whisper it quietly, it seems we are returning to a normal housing market. If current transaction levels continue we could see housing transaction growth of 10% in 2025, such volume growth would be good for the sector, and the challenge will be for housebuilders to keep up with demand. A real challenge, but a nice problem to have.
said Anthony Codling, Managing Director at RBC Capital Markets in response to the latest figures for December.
However, the fly in the ointment for UK Housebuilders is the state of Housing Associations finances. We hope that the Government addresses this funding issue in the Spring Sending Review because, in our view, the state of housing associations finances is a bigger brake on supply than mortgage rates are on demand. The scene is set, the actors are on stage, and the audience is seated all we need now is for the Government to raise the funding curtain.
A 19% increase in the provisional seasonally adjusted estimate of the number of UK residential transactions in December 2024 against 2023, and 3% higher than November 2024 is reported in this month’s numbers.
Joe Pepper, UK Chief Executive Office at PEXA, said:
“Against a backdrop of a stagnating economy, December’s uptick in transaction activity is a glimpse of light for the housing market. This activity is most likely attributable to buyers hoping to complete their transactions before Stamp Duty changes in April. We anticipate this pattern of activity to continue as the deadline looms, especially amid heavy speculation of an interest rate cut next week. Buyers will be rushing to secure the best deal from lenders and complete the buying process before it is too late.”
This is great for getting the market moving, and good for the economy, but it will also place an inordinate amount of pressure on the infrastructure that sits behind the housing market. This is especially true for the conveyancing system that is already at maximum capacity, exacerbated even further by demand in the remortgage market with some 700,000 borrowers needing to remortgage this year. The entire system could be overwhelmed beyond its means. The urgency of investment in vital digital transformation cannot be overstated if we’re going to see the positive outcomes of this activity for all involved.”
October 2024 saw a sharp increase in seasonally adjusted residential transactions of 9% compared to the previous month. Transactions fell back to their previous levels in November 2024 and have remained relatively stable in December 2024.
£202m saved on SDLT
SDLT figures show £202m was was relieved in Q4 2024 which represents an increase of 10% compared to Q3 2024 and an increase of 38% compared to Q4 2023. Te total number of transaction in which SDLT applied in Q4 2024 (October to December) were 11% higher than in the previous quarter, and 19% higher than in Q4 2023; as a result receipts were 23% higher than in the previous quarter, and 31% higher than Q4 2023
An increase of 10% in the first time buyer relief claims between Q3 2024 and Q4 2024 (37,600 to 41,500), and 34% year -on-year is evidence of activity following confirmation in the Autumn budget the nil rate band would revert to 2022 levels after 31st March 2024. And overall market activity saw a 16% increase in residential property receipts in Q4 2024 against the previous quarter, and 27% higher than Q4 2023.
“Stamp Duty changes across England and Northern Ireland, more competitive mortgage deals, easing financial pressures and higher house prices are all contributing to higher demand and growth within the housing market. This overall mix of market conditions has inspired many and provided extra confidence many people might have been waiting for to consider their next house move.
said Nathan Emerson, CEO of Propertymark
“Propertymark member agents reported that new buyers registered per branch have on average increased year on year by 44%. Therefore, with demand rising, now is a compelling moment to consider putting your house on the market. However, activity will likely settle around April especially, allowing those looking to move home to more comprehensively scan the market and negotiate in a slower-paced and more unpressured marketplace.”