In a time where doom and gloom dominates the headlines and all anyone seems to want to talk about is how badly damaged the UK economy is, this update from HMRC this week almost made me quite literally jump for joy. You would have to be living under a rock to not know what has happened to the property/mortgage market and the UK economy as a whole over the last few months. The mortgage industry was absolutely ravaged by rate increases and as a result, house sales have also taken a hit with some professionals expecting a 5% decrease in value in 2023. However, this week HMRC have announced that house purchases have actually increased by 12%. A good sign that things might be looking up in 2023?
What Have HMRC Said About House Purchases?
According to HMRC, the number of residential property transactions in November was 12% higher than in November 2021. That means specifically properties that people have purchased to live in and does not include buy-to-lets. They have also announced that there were 114,200 home purchases in November 2022, a rise of 4% compared to October 2022 too.
But, this may all be a red herring and we may be seeing things with rose tinted glasses unfortunately. Here is what their website specifically says about the data that they have found:
‘Recent increases in mortgage rates and subsequent impacts on the residential housing market have not yet had an observed impact on these statistics. This is likely because transactions data is based upon date of completion, which is later in the property purchase process, and it typically takes between 2 to 4 months for a house sale to complete.
Levels of current monthly property transactions remain slightly elevated but similar to late 2019, before the coronavirus (COVID-19) pandemic. Residential property transactions in the year to date remain lower than those in 2021 to 2022, which were likely elevated due to pent-up demand from the pandemic and temporary reductions in stamp duty.
Year on year comparisons for UK residential transactions should be treated with caution because significant forestalling activity was observed in September 2021. Impacts from forestalling in September 2021 may also have impacted November 2021 transactions, however the impact was not as significant as for October.’
What Do The Professionals Think?
We at Oportfolio do think that property prices will go down in 2023 and we do think that interest in purchasing will probably deplete a bit. Naturally people are reluctant to get a mortgage as rates are quite high at the moment and they are reluctant to invest in a property if the chances are that it will decrease in value. However, rates ARE decreasing and lenders DO want to lend. It is just a matter of the buyer speaking to the right advisor, getting some guidance on which lender to go with and when best to purchase.
We can do that for you. And we don’t expect rates to increase again. Or if they do, it will only be very minimally. Property value too won’t drop significantly. All of these 5, 10, 15, 20% drops that some people are predicting are all fear mongering in our eyes. But if you are still concerned about purchasing in 2023, we are always here to help. Give us a call today if you need some free help and guidance from our experts.