MARKET: Number of house sales dropped in December but ‘still strong’
Sales dipped 3% on November but were just 1% down on the same time last year, government figures from HMRC reveal.
House sales in December were some 3% down on November but just 1% down on the same time last year, government figures from HMRC revealed yesterday.
The provisional seasonally adjusted estimate of the number of UK residential transactions in December 2022 is 101,920, 1% higher than December 2021 and 3% lower than November 2022.
ENCOURAGING
Nick Leeming, Chairman of Jackson-Stops, says it’s encouraging to see transaction levels hold year-on-year.
“Buyers have made the most of the quieter period to complete their transactions, clearing the way for a new wave of properties to enter the market in the Spring and provide an anticipated bump in instructions and buyer interest,” he says.
“Ahead of this, we have seen mortgage rates fall to their lowest point for three months, helping to ensure that borrowing remains accessible, and transactions can still go ahead in significant numbers up and down the country.”
STRENGTH
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, points out that transaction numbers always tend to be a better indication of market strength.
But he says: “The small changes in today’s numbers show only part of the story unfolding after the mini-Budget slammed the door on a significant proportion of ongoing activity.
“Since then uncertainty has reigned since interest rates shot up. Business has only recently begun to return since some of those rises have been reversed but lack of supply continues to hold back buyers.”
Alex Lyle, Director of Richmond estate agency Antony Roberts, says the start of the year has been reassuring.
“January has got off to a strong start with a 25% increase in new instructions compared with the first three weeks of 2022. New demand levels and deals agreed are pretty much the same as this time last year. Meanwhile, the diaries are the busiest they have been for months so all in all, it’s a reassuring start to the year.”
Andy Sommerville, Director at Search Acumen, says that the final transaction data for 2022 echoed the trend his firm saw throughout the last quarter of the year.
“The recessionary period we are now in the midst of, alongside the higher borrowing rates on offer compared to this time last year, has certainly impacted people’s appetite to move.
“Although transaction levels tend to seasonally decline at this time of year, it is a sensible assumption to expect to see this trajectory continue in 2023 as we settle into a sustained period of financial difficulty.”
FLUIDITY
Simon McCulloch, Chief Commercial and Growth Officer at Smoove, believes that all things considered, the expected significant drop hasn’t materialised.
“This highlights the strength and fluidity of the UK housing market,” he says. “As the hangover of the mini budget fades and the market begins to adapt to higher rates, we should begin to see some of the market’s former dynamism begin to return.”
Adam Oldfield, Chief Revenue officer at Phoebus Software, says that it’s encouraging that the housing market continues to move along – despite the knock in confidence from the mini-budget.
“As predictions abound for 2023, and with conflicting reports regarding the number of buyers registering interest this month, it is perhaps inevitable that some of those predictions err on the negative side,” he says.
“Nonetheless, there are signs that confidence is returning and, while fuel prices continue to fall and inflation steadies, might we see a traditional post-Christmas pick up in transactions in the first quarter?”
While it may be correct that mortgage rates have fallen to the lowest point in three months. The Bank of England Base Rate remains at its highest since 2007.
Agents talk about their stock levels increasing; (this is very easy to check by looking at the agent’s Rightmove Micro Sites). So an agent with five instructions, four of which are price reductions and seemingly only one new instruction in 2023, suggesting that transactions will/are going ahead in significant numbers, are either fooling themselves (and in turn others) or, IMHO, frankly delusional.
Actual transactions show the true state of the market – they are down.
The current policy the government is following will significantly affect the property market. The predicted 2 per cent drop in asking prices given by Rightmove is wholly meaningless if actual sales occur at 10 per cent below the asking price.
As the cost of living intensifies amid soaring inflation, the slowdown will become even greater than it is now. Leading property experts forecast falls of between 5 per cent and 12 per cent. British banks and building societies have widely reported lending to fall by 23 per cent – ending a two-year boom that lifted house prices by more than a quarter. Trade body UK Finance has forecast that mortgage lending will fall to £131bn from £171bn (£189bn in 2021). As a result, property sales are set to fall to 1.01m in 2023 from 1.27m in 2022. (Savills thinks they could go as low as 870,000).
We expect to hear the truth from lawyers, accountants and other professionals; why, if agents want to be taken seriously, do they not do the same?