Drop demonstrates a seasonal lull, experts say
The number of UK residential property transactions fell again in December while non-residential transactions increased, the latest HM Revenue & Customs (HMRC) Property Transaction report has revealed.
Residential transactions in the UK totalled 85,820 last month, which is 20% lower than last year and 2% lower than November 2023. This, according to HMRC, is the fourth consecutive month-on-month fall in residential transactions.
In contrast to the slowing residential market, non-residential transactions rose by 8% in December compared to the previous month and by less than 1% relative to the figures 12 months prior.
“The drop in property transactions last month demonstrates a seasonal lull, as can be expected during December,” Ben Waugh, managing director at later life lender more2life, commented on the HMRC report.
“As we enter 2024, lowering rates will likely bring a flurry of buyers back to the market, and we can expect an uptick in activity to start the year off well. The ongoing rates reductions and increasingly stable interest rates are a further sign that 2024 will turn a corner on the disruption of last year.”
For Tomer Aboody, director at property lender MT Finance, the lower transaction volumes are further proof that some government intervention is needed in order to get the market moving.
“While interest rates are stabilising, leading to lower mortgage pricing, stamp duty is still the biggest outlay for any buyer and therefore, also the biggest obstacle,” he pointed out. “If there was to be some reduction in stamp duty, this would incentivise sellers to finally move and increase the supply of properties coming to market.”
Despite a slower pace in December due to the holiday season, the market, according to Clare Beardmore, director at Legal & General Mortgage Club, received an early gift in the form of a rates war.
“Falling swap rates – which determine mortgage pricing – have encouraged healthier competition among lenders, leading to a decline in average mortgage rates for the fourth consecutive month in December,” Beardmore noted. “The average mortgage rate now sits below 5%, helping to drive an increase in borrower enquiries.
“As we saw in Rightmove’s January data, there are green shoots in the housing market, with buyer demand up 12% against this time last year. We’re slowly edging towards spring – typically the busiest season for the housing market.”
Emma Cox, managing director of real estate at specialist lending bank Shawbrook, agreed, saying that the slight dip in residential property transactions for December “is a minor speedbump in an otherwise positive start to the year.”
“Zoopla’s latest house price index shows a 13% surge in agreed sales this month, indicating a renewed sense of confidence,” Cox added. “This is particularly encouraging for professional property investors, given predictions of an upward trend in property prices.”
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