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Will UK housing transactions hit a million in 2013?

The property market recovery is underway, with many experts projecting that UK housing transactions could hit the one million mark for the first time since the 2007 peak.

PROPERTYdrum

With housing market confidence improving, mortgage lending rising and house building levels increasing, property specialists expect to see UK housing transactions in 2013 beat last year’s tally of 932,000 (HMRC), but will they hit the one million milestone?

The respected Ernst & Young Item Club, which uses the Treasury’s economic models, certainly seem to think so, due mainly to falling mortgage borrowing costs, fuelled by the Government’s £80billion Funding for Lending scheme, the introduction of the ‘Help to Buy’ scheme, and plans to underwrite £130bn in mortgages from next year.

Analysts at the group have set the target after forecasting a 7.5 per cent rise in transactions in 2013, the highest since the 2007 peak, followed by a another 7.8 per cent increase to 1.08 million in 2014.

Nida Ali, Economic Advisor to the Ernst & Young ITEM Club, said, “We’re expecting the number of transactions to hit the million mark this year for the first time since 2007. This should be sufficient to generate a steady acceleration in house price growth over the next couple of years.”

Optimistic agents

Stuart Flint of Fisher German chartered surveyors thinks that the encouraging data for the first quarter of this year offers cause for optimism. “We expect to see a greater supply of properties, increased mortgage lending and more confidence amongst buyers leading to improved transactional volume,” he said. “We predict that UK residential transactions will rise above one million [in 2013] for the first time since the crisis year of 2007.”

Having seen sales jump by 15.3 per cent during the first three months of this year compared to the same period in 2012, the Robinson Jackson Group has enjoyed a flying start to 2013. The company claim that they have not only seen more homes being sold, but also a greater number of properties coming onto the market, as well as a higher volume of buyers registering their intent to buy. “We believe that UK housing transactions will reach more than one million this year,” said Peter Jackson of Robinson Jackson.

London leads

The latest figures from Sequence, owners of 300 branches including Barnard Marcus, William H Brown and Fox & Sons and other leading brands, also shows a hike in the volume of UK transactions, with activity rising by 12 per cent year-on-year in April 2013, up four per cent compared to the previous month, led by growth in London.

There’s a real feeling of having turned a corner in Q1 of 2013.” David Plumtree, Chief Executive, Sequence

david_plumtree_sequenceTheir data reveals that London transactions in April were up 15 per cent year-on-year and five per cent since March. David Plumtree, Chief Executive at Sequence, commented: “Transactions are significantly higher than last
year as the number of mortgage applications has shot up by almost a quarter and prices are holding firm. This suggests that buyer confidence across the UK property market is rising with buyer registrations and instructions increasing by a monthly average of 11 per cent and 10 per cent respectively since January.

“There is a real feeling of having turned a corner in the market in the first quarter of 2013 with a momentum not seen for years. We are predicting a positive year.”

Less convinced

However, while many housing experts agree that market conditions are improving, some do not believe that UK transactions will not reach the one million mark this year.

Transactions may get close to I million in 2013 but not exceed that.” Grainne Gilmour, Knight Frank

grainne_gilmour_knight_fran“Activity in the housing market will be helped by the recent Bank of England and Government initiatives to boost mortgage lending. We expect that transactions may get close to one million this year but forecast that they will not exceed this barrier until 2014,” said Grainne Gilmore of Knight Frank.

David Smith, Economics Editor of the Sunday Times, and The Paragon Group’s Chief Executive, Nigel Terrington, also rejected claims that property sales would recover to a million this year.

Speaking at the recent Great Housing Debate in Westminster, Smith said that the level of transactions at present is “too small in proportion to the size of the market. It would take around three to four years for transactions to reach one million.”

Reflecting on the 1992 recession, Nigel Terrington, Chief Executive of The Paragon Group, noted, “The property market took a long time to recover and only with GDP growth did the number of transactions increase.”

What do you think will happen with UK housing transactions this year? Email your thoughts to [email protected]

Contacts:

  • The Paragon Group www.paragon-group.co.uk
  • Knight Frank www.knightfrank.co.uk
  • Robinson Jackson www.robinson-jackson.com
  • Sequence www.sequence.co.uk
  • Ernst & Young www.ey.com
  • Fisher German www.fishergerman.co.uk
July 19, 2013

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