Residential property sales dropped by almost a fifth (18%) in February compared with the same month last year, providing yet anaother indication that the housing market is slowing,
According to HM Revenue and Customs (HMRC), 90,340 homes were sold across the UK in February this year, down 4% month-on-month.
Nick Leeming, Chairman of Jackson-Stops, commented: “Nearly three years to the day since lockdown began in the UK, the housing market is worlds away from the property paralysis that it once saw.
“The figures reflect the air of reservation from homebuyers that followed Liz Truss’ time in power and the mini-budget fallout which then began. Yet, while transaction levels have cooled slightly, the property market isn’t applying the brakes.
“Just in time for the ‘Spring bounce’, buyers are renewing their searches in earnest as more listings enter the market, building up momentum for a period of more deals and with that, more stability. Internal data from across Jackson-Stops’ own national network shows a moderate uptick in viewings, instructions, exchanges, and listings month on month.
“Regional trends remain key to understanding the housing market today, but standout properties close to urban hubs are continuing to benefit from keen buyer interest. Our network of offices in the South East, in key commuter locations such as Reigate, Chichester, Dorking and Woking, have seen a noteworthy uplift in new instructions with Woking also seeing new enquiries rise by more than a third month on month, gearing up for what could be a very busy Easter.
“The market doesn’t know yet what repercussions leaving housing out of the Budget could have on transactions levels. While this may be the Chancellor’s attempt at clearing his lines rather than risking an own goal, keeping supply and demand in balance will become even trickier when avoiding the bigger questions around housebuilding, energy efficiency and Stamp Duty reform.”
Iain McKenzie, CEO of The Guild of Property Professionals, said: “The housing market is proving to be resilient in the face of political and economic instability, showing only a modest decline from month to month.
“The annual picture shows a greater drop-off, but don’t forget the scenes we were seeing this time last year, when buyers were scrambling for properties and there was a shortage of stock in almost every part of the country.
“Estate agents are now taking the chance to get more properties on their books and are able to give buyers more choice.
“House prices are holding steady and defying the forecasts we faced at the end of last year.
“Inflation is still high and many budgets are squeezed to the point that there’s limited ability for prospective buyers to increase offers above the asking price. We could see this trend continue until living costs are brought under control.”
Frances McDonald, director of residential research at Savills, commented: “Residential property transactions remained subdued in February as the fallout from last year’s mortgage market turmoil continues to feed into completed sales, though numbers remain at more than 90% of their pre-pandemic levels for the month.
“Lead indicators suggest that this slowdown is likely to continue as mortgage approvals in January were -41% below their pre-Covid average for the month, according to the Bank of England. However, total agreed sales remain surprisingly robust, at 93% of their pre-pandemic level in January, according to TwentyCi. This suggests that cash buyers are supporting overall transaction levels and are continuing to take a greater share of the market, particularly at the top end, which is in line with our forecasts for this year.
“Cash buyers are expected to outperform the market as a whole and remain within -14% of their pre-pandemic norm this year before returning to be within -4% of this level by 2025.”
Tom Bill, head of UK residential research at Knight Frank commented: “Today’s figures underline the extent of the hangover from the mini-Budget for the UK housing market. February’s drop in sales needs to be seen in the context of a housing market that effectively switched off for the last quarter of 2022 and only turned back on again after Christmas.
For anyone who knows how long it takes to buy a house in the UK, it shouldn’t be a surprise when next month brings similarly weak numbers. Demand and supply have been solid so far this year and sales volumes will eventually catch up against an economic backdrop that is proving stronger than expected.
A recession looks likely to be averted and inflation forecasts have been revised down, although we think prices will come under pressure as more owners move onto higher mortgage rates and supply builds from the lows of the pandemic.”
Jason Tebb, CEO of OnTheMarket.com, remarked: “As expected, the number of transactions continues to decline as the housing market rebalances.
“That said, buyer and seller confidence seems to be holding up remarkably well, which may be down to the clear direction that the government and Bank of England have set out in terms of dealing with inflation and its impact on interest rates. The upheaval of the autumn has given way to increased calmness, with inflation looking as though it may have peaked. Interest rates may have a little higher to go but the markets are also suggesting they may be close to their peak, if not there already.
“As the market adjusts to something akin to what it looked like pre-pandemic, it is important that sellers price their homes correctly with the support of an expert agent. People will always need to move, even if conditions are tougher, but properties must be priced correctly now more than ever.”
Nathan Emerson, CEO of Propertymark, added: “Estate agents have seen an increase in homes coming onto the market which has bought buyers out of the woodwork and increased the number of potential buyers registering in branch.
“Most properties are sticking on the market for longer, feeling similar to 2019 and interestingly, the viewing to sale ratio has increased meaning on average, less viewings are needed per home in order to sell.”
Andy Sommerville, Director at Search Acumen, commented: “The data shows how we are continuing to see the impact of a challenging economic environment on residential transaction volumes. Whether through buyers pulling out of deals, or current lending markets dulling consumer appetite, it’s clear the transaction highs of the past two years are long behind us.
“Macro-economic conditions are more promising however, as if the Chancellor is correct, we have not only narrowly missed a recession, but have significant growth ahead. The commercial property market is seeing green shoots of recovery after a tough time grappling lifestyle shifts effecting office and retail sectors. A Spring boom could be in store for the life sciences and tech sectors thanks to a multi-billion-pound investment announced in the Budget, alongside a push towards sustainable buildings driving occupier demand. Identified as a high-growth sector, time and monetary investment in infrastructure to support research and development in the hopes of making the UK a science superpower, will help feed this market’s growth over the next decade.
“For conveyancing firms in the commercial space, especially those dealing with a new grade of tech businesses, there will be an even higher expectation to use digital tools to maximise efficiencies. Digitalisation can ensure competitor advantage and support commercial productivity when operating in this space, simplifying and speeding up processes from hours to second. If the UK is to become the world-leader in technology that the Government is hoping for, the conveyancing sector now has the opportunity to drive the course for a digital property revolution.”
Matthew Thompson, Chestertons’ head of sales, said: “Whilst buyers remained undeterred in February, there were fewer sellers entering the market. This is leading to a limited number of properties being put up for sale in March and April, leaving many house hunters frustrated.”
“The capital continues to experience a chronic undersupply of suitable housing; particularly as demand has remained strong since the start of 2023 with more buyers booking in viewings. The number of offers being withdrawn has also decreased by 11% which indicates that there are currently fewer window shoppers and more serious buyers entering the market.”
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