HMRC reveals big slump in residential property deals

New data from HM Revenue and Customs reveals a 22 per cent annual drop in residential transactions in the year to December 2023, compared to the same period in 2022.

The provisional non-seasonally adjusted estimate shows that residential transactions in November were down to 87,640, a two per cent eduction from October 2023.

The provisional non-seasonally adjusted estimate for non-residential transactions in November was 10,250, a slight decrease from the previous year but four per cent up on October 2023.

Nathan Emerson, chief executive of estate agents’ body Propertymark, says: “2023 has not been without challenges for the housing market, with price fluctuations being a strong indicator of wider economic health. We have seen a brutal mix of high inflation and elevated interest rates knock consumer confidence across the year.

“Propertymark are positive the peak of the turmoil is now hopefully behind us; however, we must tread with caution over the coming months. We are currently seeing pockets of house price growth, which is reassuring, but to be fully confident this must be universally seen across the entire UK.”

Jeremy Leaf, the north London estate agent and former RICS residential chairman, comments:  “These transaction numbers provide a more accurate representation of market health than prices as they reflect cash and mortgage activity, although they are a little dated.

“Nevertheless, it’s clear buyers were not as deterred by interest rate and inflation volatility, which was so prevalent a few months ago, as we might have expected.  We saw the same in our offices, which is a positive sign for the start of 2024 now that the cost of living and mortgage payments have started to fall and a little more confidence is apparent.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, adds: “Transaction numbers have slipped again in the face of higher mortgage rates and the cost of living, as borrowers reassess what they can afford to pay. Encouragingly, the direction of travel for new mortgage rates is downwards, with fixed rates looking increasingly attractive. However, borrowers do have to accept that they will pay considerably more now than in the heady days of sub-one per cent mortgages.

“With the Bank of England holding rates again at the December meeting, this has further reinforced the belief that base rate has peaked and the next move will be downwards, which will provide a welcome boost.”

Meanwhile Tomer Aboody, director of property lender MT Finance, states: “Less confidence in the housing market, along with higher mortgage costs, has resulted in a lower level of transactions as buyers and sellers were not motivated to transact.

“However, there should be more encouraging signs to come in 2024 as rates seemed to have peaked and inflation is reducing, which will hopefully translate into a stronger market with an uptick in transactions. Some assistance from the Government might be needed in order to persuade or encourage sellers to finally move.”

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