Data released by HMRC this month has revealed that official statistics show property transactions were down in February 2023 compared to the same time period in February 2022. A property transaction is both the sale and purchase of property in the UK, reflecting the instability of the property market and mortgage market in the last few months.
What Does The Data Show About Property Transactions?
The estimate for residential transactions in February 2023 given by HMRC shows that there were around 76,920 transactions, which is down about 18% from 90765.6 in February 2022. This figure shouldn’t really come as a surprise after the battering that the mortgage market and subsequently the property market has had since the end of 2022 and arguably even earlier. After the government’s disastrous mini-budget was revealed in September 2022, interest rates sky rocketed and mortgage lenders increased their own lending rates with some rising to almost 8% from lows of 1 and 2% previously.
People understandably were worried by these high interest rates and a lot were discouraged from buying and selling their homes, for fear of being subject to an extortionate monthly mortgage commitment. As a direct result, the amount of people looking to purchase a property dropped significantly and competition for property also dwindled causing house prices to drop. And that is where we find ourselves now. Luckily mortgage interest rates have come down a lot and in most cases continue to drop, interest is returning to the market again and prices are rising. But unfortunately we are only just starting to see the real figures of the impact on real property transactions.
Is It All Bad News?
The answer to that, in terms of property transaction activity, is no. Yes, property transactions are down compared to this time last year. That is understandable. However, the number of transaction in February 2023 is actually 2% higher than it was in January 2023. Signalling to us that the market is indeed recovering, however slowly it might be.
The provisional seasonally adjusted estimate of UK residential transactions for February 2023 is 90,340, also marking an 18% decrease compared to February 2022 and a 4% drop from January 2023. When looking at non-residential transactions such as buy-to-lets, the HMRC figure for February 2023 is an estimated 8,710. Again, this is 7% lower than it was in February 2022 but, it is still 8% higher than it was in January 2023. The provisional seasonally adjusted estimate for non-residential transactions in February 2023 is 9,870, a 7% decline from February 2022 but a 5% increase from January 2023.
Mortgage Broker’s Opinion
So what do we think as mortgage brokers at Oportfolio? Well it’s clear to us that the property market is on a bounce back. Not as quickly as most people might have liked, but definitely quicker than we realistically expected. It is fair to say that we all felt a sense of dread when the Bank of England started raising interest rates, and we felt even more dread when property prices started to drop on average. But we can see from the data released by HMRC that things are looking up. A monthly increase in transactions of 2% and 7% is very reasonable and we expect this to increase even more per month as mortgage interest rates continue to drop.
If you or anyone you know is interested in looking at buying a property and getting a new mortgage, now is a great time to speak to one of our advisors to see what deal we can help you secure. Give our team a call today for a free initial mortgage consultation.