Housing market recovering after slow start, HMRC says

The housing market has bounced back after a sluggish start to the year, the latest figures from HMRC show.

House sales in March were down on last year but still better than in the previous month, as the market recovers from the impact of higher mortgage rates.

A provisional non-seasonally adjusted estimate of the number of transactions in March is 94,870, 14% lower than March 2022, but 26% higher than February 2023.

And the provisional seasonally adjusted estimate of transactions in March is 89,560, 19% lower than March last year and 1% higher than February this year.

These figures compare favourably with February’s stats, which showed a drop of 27% in the  non-seasonally-adjusted total, and 3% in the seasonally-adjusted number.

HMRC says: “Towards the end of 2022, mortgage and interest rates increased, leading to a decline in residential property transactions in recent months.

“However, seasonally adjusted residential and non-residential property transactions in March have increased in comparison to February.”

Industry reaction

Nick Leeming, chairman of Jackson-Stops, says: “Today’s figures show a move in the right direction, with month-on-month transaction growth starting to emerge.

“However, the volumes are yet to fully reflect the typically busier spring months, when many home movers complete before Easter.

“Transaction volumes on the surface are levelling out, as the market self-regulates after an extended period of erratic activity and unserviceable levels of buyer demand,” he says.

Tom Bill, head of UK residential research at Knight Frank, says: “The steep drop in property sales that followed the shock of the mini-Budget has bottomed out.

“The mortgage market has stabilised and buyers increasingly accept they are in a new lending landscape after 14 years of ultra-low rates.

Buoyed by savings accumulated during the pandemic, record levels of housing equity and a strong jobs market, activity has been solid, but not spectacular this year at all price points.”

Tomer Aboody, director of property lender MT Finance, says: “Although a slight recovery in transaction numbers in March is a welcome boost for the market, if you put the numbers into context over the past decade, they are still lower than any year suggesting that the market is looking to recover after successive interest rate rises and higher cost of living.

“With talks of the likelihood of inflation reducing, along with rates towards the end of the year, it could then be time for some government intervention with regards to stamp duty once again, in order to inject some life into the market.”

Alex Lyle, director of Richmond estate agency Antony Roberts, says: “Transaction numbers are proving to be fairly steady, although the average time taken from under offer to exchange of contracts is at an historically high level.

“Everything is taking longer this year, so buyers and sellers alike must ensure they have all their paperwork in order, and a good solicitor in place, to ensure deals proceed as smoothly and successfully as possible.

“The multiple bids scenario seen so often in the first half of last year is no longer apparent. That said, new buyers are proving to be committed and decisive, with plenty of new enquiries since Easter boding well for activity in coming weeks.”

Emma Cox, MD of real estate at Shawbrook, says: “Sales volumes are yet to catch up with what’s looking like a return in demand to the property market.

“While buyers and sellers have tentatively been dipping their toes back in, March’s property transactions were subdued.

“It’s not as gloomy as it appears, though. Given how long it can take to complete a purchase, it’s likely a lag from Christmas when the market is typically quiet anyway, compounded by soaring inflation and mortgage rates at that time.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Although, of course, reflecting buying decisions made up to several months previously, transactions are always a better indicator of market health than more volatile house prices.

“Today’s numbers confirm what we’ve been seeing on the ground for the past few months – buyers and sellers are emerging from a period of uncertainty and responding to increased supply of properties, as well as more stable interest rates. As a result, property market activity is proving to be much more resilient than we had feared, certainly at the end of last year.

“However, inflation and falling real incomes remain a concern, which is resulting in more hard bargaining and protracted sales.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: ‘Transaction numbers seem to be holding up even in the face of higher interest rates and the cost of living uncertainty.

“Swap rates, which underpin the pricing of fixed-rate mortgages, have risen again on the back of the disappointing inflation news.

“However, lenders continue to reduce their fixed rates, albeit at a slower pace than before, with bigger reductions seen on higher loan-to-value mortgages as they try to attract first-time buyers.”