Interactive Investor

Significant fall in property transactions

HMRC property transactions data suggest spring/summer season proceeded not with a bang, but with a whimper amid affordability pressures.

31st August 2023 10:32

by Myron Jobson from interactive investor

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Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “HMRC’s latest data suggest that the typically busy spring/summer season in the property market proceeded not with a bang, but with a whimper this year as the affordability squeeze from painfully high mortgage rates and broader cost-of-living pressures kept many would-be buyers at bay.

“There was a significant fall in residential property transactions year-on year whichever way you slice it – down 22% according to the provisional non-seasonally adjusted estimate, or 16% seasonally adjusted. If you strip out the spike in property transactions in July 2021 from overwhelming levels of demand spurred by the introduction of the stamp duty holiday, we’re yet to see a full return to form when it comes to transaction levels.

“The modest 1% uptick in transaction volumes month-on month, seasonally adjusted, does not necessarily suggest that the property market is turning. Instead, it shows that there is still a sizeable cohort of buyers who are able to move up the property ladder despite the harsh market conditions.

“House prices [are] likely to continue to sag under the weight of an uncertain market and hesitant buyers. However, strong wage growth, in tandem with the greater availability of longer-term mortgages and more flexibility from lenders, could continue to support the property market, which could result in a soft landing for house prices rather than a crash in the near future.”

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