It's a mixed picture, industry experts suggest
UK residential property transactions in February were 6% lower than the same month in 2023, but 1% higher than in January this year, according to new data from HM Revenue and Customs (HMRC).
HMRC’s provisional seasonally adjusted estimate of the number of residential transactions last month is 82,940.
It also reports a seasonally adjusted estimate for non-residential transactions in February as 10,050, 4% higher than a year before and 6% higher than January.
It said its figures showed a second consecutive month-on-month increase in transactions.
Simon Webb, managing director of capital markets and finance at later life lender, LiveMore, said: “While there is a general feeling that the housing market has picked up at the start of this year, there is still a noticeable dip in the number of residential housing transactions, when looking at the real, non-seasonally adjusted figures. February transactions year-on-year were lower than any other in the past ten years, and the picture is worse when we look at the financial year to date where they are more than 10% lower than in the past ten years.
“Confidence in the economy is still in short supply, particularly amongst older borrowers – and the impending election will be unsettling people still further. Borrowers are crying out for some stability, politically and economically. In the meantime, lenders can play a role, by providing access to finance to help homeowners of all ages to help them to ride out the stormy times we find ourselves in.”
Karl Wilkinson, CEO at Access Financial Services, responded: “While these figures are an improvement on last month’s, reflecting the rickety uplift in the market towards the end of last year, they are still low compared to the year before,” he said. “People are still feeling the squeeze.
“At 3.4%, inflation in the UK is quite a way off the 2% sweet spot and still higher than in the EU where it is 2.6%. While I appreciate caution, I hope that we don’t see the Bank of England continuing to delay a cut in the base rate. We need interest rates to go down soon to make mortgages more affordable, boost consumer confidence and drive sales.”
He added: “A Spring Budget cut in stamp duty would have helped. Perhaps by autumn we’ll have lower interest rates and an election-spurred stamp duty reduction, which would get people making property decisions with more confidence.”
Nick Leeming, chairman of estate agents Jackson-Stops, commented: “Whilst today’s figures show signs of stability, recent falls in inflation and the expectation that the Bank of England will cut the base rate in May is paving the way for a spring bounce.
“Home movers are 17% more active than this time last year according to our own national network of offices, indicating a potential uplift to come in the months ahead. The return of sub-4% mortgage rates and a notable uplift in supply is giving buyers greater choice, and affordability is also expected to further improve as the year progresses.”
Meanwhile, Karen Noye, mortgage expert at wealth management business, Quilter, gave this reaction: "The housing market has been remarkably quiet in the past few months, and new data from HMRC this morning shows that this trend has continued. Though the figures revealed the second consecutive monthly increase in seasonally adjusted residential property transactions, the uplift was a mere 1%.
“Following a dip in mortgage rates at the start of the year, they have more recently risen slightly which is likely to cool the market further. This quiet period has put some downward pressure on prices, but it has not had the dramatic impact that some had predicted when mortgage rates soared. This has resulted in moving home or taking the first step onto the property ladder becoming that much harder when combined with higher mortgage rates.”
She added: “All eyes are on the Bank of England as we await its first interest rate cut. It will now have some confidence that inflation is finally coming to heel, but has a difficult balancing act ahead of it and will be reluctant to move too much too quickly so we are likely to be waiting for some time yet.
“This will have a knock-on effect on the housing market as many prospective buyers will likely be holding out in the hopes of lower mortgage rates. Once the Bank does begin lowering its base rate, however, it would present a more favourable borrowing landscape which could pull prospective buyers out of ‘wait and see’ mode and accelerate the housing market’s recovery.”
Adam Oldfield, chief revenue officer at Phoebus, a solutions provider to the banking, building society and lending sectors, concluded: “These numbers are a great improvement from January’s figures, where we saw a 10% decrease in non-seasonally adjusted property transactions compared to January 2023. In February, transactions were only 3% lower than February 2023.
“While still down on last year’s figures, this reflects the increasingly positive market sentiment that we’ve been seeing in recent months. Despite the lower dip in inflation than expected and recognition that the economy is moving in the right direction, we have yet to see the Bank of England cut interest rates. Andrew Bailey keeps edging the car forward each time we try to get in.
“This isn’t driving the stability we need in the housing market. The current oscillation of mortgage rates is mesmerising – every day we see lenders lowering and raising interest rates. We should see a very different picture for property transactions in the coming years, driven in part by the digitisation and open sourcing of property data.”
Andy Sommerville, director at property data and insight provider, Search Acumen, welcomed the figures.
“We are starting to see early green shoots of spring in today’s residential transaction figures, signs that the market is bouncing back from a difficult period constrained by affordability and supply last year,” he noted. “We can take some confidence in the gentle recovery of the market as potential movers are encouraged by falls in mortgage rates and a more stable macro-economic environment.
"The commercial landscape has exhibited a degree more resilience compared to previous months, with non-residential transactions up 6% on last month, but down 3% annually. Whilst this modest uplift may inspire some confidence with investors, high borrowing costs continue to put a handbrake on larger commercial deals.”
Katie Pender, managing director of Target, a provider of business process outsourcing for the financial services industry, said: “Today’s month-on-month figures are certainly hopeful, and the market looks healthier than it did at the beginning of the year. But there are still many people who are struggling to get on the housing ladder or who are bogged down in the homebuying process.
“With a potential change in government, there is uncertainty too. What we can do is to continue to support lenders and borrowers with the latest technology which is essential to speeding up decision-making and improving customer satisfaction.”
Maria Harris, chair of the Open Property Data Association, suggested: “February’s rise in residential transactions is an encouraging sign of recovery. It’s a busy time for the home-moving market, with rate changes and market updates coming at dizzying pace. Having a well-functioning home buying market has never been more important, so it's encouraging to see the Levelling Up Select Committee inquiry on improving the process.”
