Figures indicate "a possible slowing of the housing market"
The number of UK residential transactions in January 2023 was estimated at 77,390, around 7% lower than the same month of the previous year and 27% lower than December 2022, the latest 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 returning to pre-pandemic levels.
Meanwhile, the number of non-residential transactions in January was 8,500, some 1% lower than the previous year and 18% lower than December 2022.
“Towards the end of last year, mortgage and interest rates increased, and we are starting to see the impacts of those changes within these statistics,” HMRC stated in its report. “Both seasonally and non-seasonally adjusted residential property transactions appear to be depressed, indicating a possible slowing of the housing market.”
For Stuart Wilson, chairman at Air Club, it is undeniable that interest rates continue to shape a complex economic landscape for advisers and their clients alike.
“Today’s data from HMRC is a reflection of that,” he said. “Nevertheless, these figures must be viewed in context. The UK housing market is still outperforming pre-pandemic levels and transactions remain strong in spite of lingering turbulence from Q4 2022.
“We are still in the earliest stages of the year, and now the dust has started to settle following the mini budget, prospective homeowners may be more inclined to take a step on to the property ladder. But affordability remains a key issue as not only is the cost-of-living crisis continuing to bite, but lenders’ criteria remain tough.”
John Phillips, national operations director at Just Mortgages, added that HMRC’s transaction figures showed that the housing market is continuing to defy the critics and doom-mongers.
“Significant pressure on household budgets from high inflation, rising mortgage rates, and cost-of-living increases have failed to stall the housing market and transactions have remained robust,” Phillips remarked. “Underpinning this are house prices that have refused to collapse despite seemingly constant predictions across the media that they will do so and, in reality, average UK house prices increased by 9.8% in the 12 months to December 2022.
“2023 is going to be a pivotal year for mortgage brokers with over one million people coming off fixed rates in 2023, and so now is the time for brokers to show their worth and manage clients’ expectations about potential payment shocks and ensure they are on the best possible deal.”
Karl Wilkinson, chief executive at Access Financial Services, said that advisers must focus on providing knowledge and support to those looking to move or remortgage during a time of uncertainty, including the reported 1.3 million people due to come off fixed-term mortgages this year.
“This year, advisers must prioritise protection, with the consumer duty deadline approaching,” Wilkinson stressed. “Demand will return, and advisers will need to be ready to provide much needed professional support and advice.”
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