February’s HMRC monthly transaction data shows that while the number of residential transactions are down on the previous year, levels are still well above average activity.
Provisional non-seasonally adjusted property sales were 96,250 in February, 20.6% lower than February 2021 and 15.3% higher than January 2022.
HMRC has advised that the 20.6% year-on-year reduction should be “treated with caution” as high levels of activity in 2021 were mostly due to the stamp duty holiday, which attracted an influx of buyers to the market.
In comparison to February transaction data over the last decade, this year’s figures reveal much higher levels of activity than usual, with February 2022 now the second busiest February since 2013.
The provisional non-seasonally adjusted estimate of UK non-residential transactions in February 2022 was 9,860, 10.2% higher than February 2021 and 17.4% higher than January 2022.
Sales over the 2021/22 tax year so far, are still higher than any other year for the past decade (£1,261,900).
Richard Pike, Phoebus Software sales and marketing director, commented:
“It is not at all surprising to see that the figures for February 2022 are lower than the same month last year, which were boosted by the approaching SDLT holiday deadline. However, the fact that February’s transaction numbers were higher than in January is evidence that the prospect of rising interest rates gave borrowers greater impetus to secure a more favourable rate. It is difficult to see that this level of activity will continue in the coming months as the impact of the conflict in Ukraine and our own rising inflation are likely to dampen confidence.
Of course, with the Spring statement tomorrow we will all be watching to see if the housing market even registers on the Chancellors list of priorities at what is a particularly difficult time for our economy, and around the world.”
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, commented:
“February saw a flurry of house sales – producing the second busiest February in a decade. It follows news of runaway house prices during the month, with price hikes back to the pace we saw just before the financial crisis. But while on initial glance, it looks like a boom time for property, there are strong signs that it isn’t set to last.
Reality can’t be kept at bay forever. Higher energy bills are already hitting mats around the country, we’ve seen horrible hikes in prices at the pumps and in the supermarket, and tax rises are just around the corner. The war between Russia and Ukraine is also having an impact, both on sentiment and on pushing inflation even higher. We knew there would come a time when buyers decided they simply couldn’t afford to stretch themselves, and we’ve had the first indications that we may have hit that point.
The latest Building Societies Association Property Tracker found that in March, just 18% of people thought that it was a good time to buy a home – the lowest this has been since the tracker was launched in June 2008. Almost two thirds of people in that survey (65%) said they were worried about rising prices. And concerns about rising interest rates also featured – with 48% of people citing the affordability of monthly mortgage payments as a barrier to buying – up from 39% in December.
The length of time it takes to sell means weakness can take four months to filter into the figures, which means we may not see sales figures fall back for a few more months, and prices are likely to keep rising at an impressive rate for now.
February’s bump in sales reflects market sentiment in November and December, when buyers were outstripping sellers and prices being agreed were rising at pace. Even at that point, there was an awful lot of speculation that interest rates were set to increase, but some buyers will have wanted to get in ahead of the hike, to get their hands on a five-year fixed-rate mortgage at a bargain basement price, and others won’t have been phased by the idea of a small bump in rates from rock bottom.”
