"The trends we're starting to see are a far cry from this time six months ago"
The number of UK residential transactions in February 2023 was estimated at 76,920, around 18% lower than the same month in the previous year, but 2% higher than January 2023, the latest HM Revenue & Customs (HMRC) Property Transaction data showed.
HMRC noted that residential transactions have generally been stable in recent months, but a decline in numbers can now be observed, with the number of residential transactions now marginally lower than pre-pandemic levels.
During the spring of 2020, substantial decreases in property transactions were reported due to the COVID-19 pandemic. UK residential transactions gradually increased in subsequent months, alongside large peaks in March, June, and September 2021 caused by temporarily increased nil rate bands of Stamp Duty land tax, land and buildings transaction tax, and land transaction tax.
Meanwhile, the latest HMRC report also showed a 7% year-on-year decrease in the number of UK non-residential transactions. However, the February 2023 total of 8,710 was 8% higher than the number recorded in the previous month.
“Though these figures show transaction levels are down nearly a fifth compared to a year ago, as a firm of solicitors offering residential conveyancing to clients, we have seen a steady return to 2022 levels of activity, following a decline after the mini budget through to December,” Paul Currie, partner at legal advisory firm DFA Law, said.
“Last year’s mini budget spooked the city and lenders alike, but with the big banks releasing much more favourable products in the first quarter of 2023 so far, there appears to be some demand stimulus again.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added that the more stable picture in transactions after successive falls underlines the impact on the housing market of September’s mini budget.
“These figures are a better indication of activity over the past few months than house prices,” he said. “Confidence has slowly returned, now that interest and inflation rates are starting to fall, while the market is less competitive and more price sensitive.
“Many are encouraged to dip a toe in the water after failing to find a property in the stamp duty holiday-inspired frenzy.”
For Stuart Wilson, chairman at later life specialist Air Club, HMRC’s latest property transaction figures are a positive indication that the market is finding its strength again.
“There is room for further optimism as we head towards the Spring, with economic conditions improving,” he said. “The trends we’re starting to see in the later life market, as well as the wider mortgage market, are a far cry from this time six months ago.”
Wilson, however, pointed out that while things are moving in the right direction, some barriers do remain.
“Affordability is still a key issue for prospective homeowners and first-time buyers are increasingly needing support from their families to get that first foot up,” he stated. “Our industry must be ready to provide the necessary advice and guidance to help this happen, in the ways best suited to each individual circumstance.”
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