"With the number of property transactions rising, there is movement in the market once again so those hoping to buy will be keeping a watchful eye"
- Rich Horner - MetLife
According to the figures released by HMRC for August, provisional non-seasonally adjusted estimates for UK residential transactions in August 2023 stand at 95,000. This is 16% lower than August 2022 and 11% higher than July 2023. When seasonally adjusted, this figure drops to 87,010 - 16% lower than August 2022 and 1% higher than July 2023.
HMRC data also shows that the provisional non-seasonally adjusted estimate of the number of UK non-residential transactions in August 2023 is 9,720 - 3% lower than August 2022 and 8% higher than July 2023. Seasonally adjusted, this figure slightly increases to 9,870, 3% lower than August 2022 and 4% higher than July 2023.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "Transactions are always a better barometer of market health than prices. Although a little dated, these numbers clearly demonstrate a determination to proceed with home moves.
"Clearly numbers are lower than this time last year but they are certainly not falling off a cliff and expectations that mortgage rates and inflation may be at or near their peak is helping to generate more activity.
"The rising cost of living, and especially mortgages, has stretched affordability but hopefully now it’s at its maximum, which is a view held by many of our buyers and sellers."
Iain McKenzie, CEO of The Guild of Property Professionals, says: “Another uplift in property sales is a positive sign that the industry is recovering after a slow first half to the year.
“Estate agents have been enticing more sellers onto the market to give more choice to buyers when it comes to finding the right property.
“The annual picture still shows a significant drop off in sales at 16%, but nothing different to what we were forecasting at the start of the year. If anything, our predictions of an overall fall of 20% for 2023 may even be revised thanks to the consecutive months of increases we have seen.
“The lower than average levels of mortgage approvals are partly responsible for the decline, but as inflation creeps down, and the Bank of England continues to hold off interest rate hikes, we may see that trend subside.
“The affordability factor will remain a stumbling block for buyers during the rest of the year, however.
“Sellers can be reassured that there is still a healthy demand for good quality housing, especially among first-time buyers looking to escape the expensive rental market. There may be more flexibility required in the asking price than there was last year but your local estate agent will be able to advise you on what to expect in your area.”
Rich Horner, Head of Individual Protection at MetLife commented: “With the number of property transactions rising, there is movement in the market once again so those hoping to buy will be keeping a watchful eye. However, interest rates will still be a significant consideration before making any immediate property decisions.
“This is the same for borrowers who are also in a tough spot. Rising costs mean mortgage arrears are now at a seven-year high as increasing numbers struggle to meet repayments.
“Putting in place the appropriate protection to help with mortgage payments can offer far greater peace of mind in the event of an accident or illness that may hinder the ability to work, potentially jeopardising monthly repayments. In this changing environment, it’s important to carefully consider not just their immediate financial plans but also the long-term.”
Alex Lyle, director of Richmond estate agency Antony Roberts, says: "These numbers reflect what was happening in August and while we would expect a lull in the summer months, we’ve found that the market has yet to shift into top gear following the break.
"The volume of new instructions remains low in comparison to the spring but there appears real value in the market and those buyers not sitting on the fence may well find an autumn window where they aren’t in competition with many others and are dealing with vendors who are realistic.
"The hold in base rate may give hope that there’s longer-term stability on the way with regards to mortgage pricing, which in turn, should improve the confidence of those anxious about committing to a purchase."
Anna Clare Harper, CEO of sustainable investment adviser GreenResi, says: "Transactions are a useful indicator of the health of the market since they illustrate the strength - or weakness - of demand. The 16% annual reduction in transactions is a direct result of increased interest rates, which have stretched housing affordability.
"Many who already own a property are facing double or triple their previous housing costs. Potential buyers reliant on bank finance are no longer willing or able to pay last year’s prices. Nowhere is this more evident than amongst newly built homes, where affordability is trumping attractiveness. New-build transactions are now significantly below 2008 levels, to circa 1,000 per month.
"A re-pricing is expected amongst properties that are being sold due to necessity. This is because only cash purchasers are not directly affected by higher interest rates, and these purchasers have strong negotiating power. Investors we work with continue to buy, albeit cautiously, and they are typically purchasing at 10 to 30 per cent below peak 2022 market values.
"The adjustment to pricing in parts of the market is in many ways a natural next chapter following the mini bubble caused by Covid and stamp duty reductions, which created double-digit house price growth for much of the last three years."
