Following on from the release of today’s property transaction data from HMRC the mortgage industry has been quick to respond.
Here’s the key data:
- Property sales (non-seasonally adjusted) were 85,520 in January – down 22.2% from December, and down 12.6% from a year earlier.
- This is closer to typical January levels before the pandemic hit.
- Sales over the 2021/22 tax year so far are still higher than any other year for the past decade (1.167 million – non-seasonally adjusted).
And here’s what the experts have had to say:
Stuart Wilson, corporate marketing director, more2life:
“It is encouraging to see that the market has maintained its momentum as we kick off a new year. This should be a strong opening quarter, with house-hunters keen to lock into competitive rates before interest rates creep up any further and older homeowners look to augment their retirement income for the year ahead.
“Against the backdrop of rising house prices and wider inflationary pressure, homeowners are increasingly using equity release to help their family onto the property ladder – one in five plans taken out in 2021 was used to support family members, with older borrowers gifting £58,734, on average, to help loved ones buy their first home. While this trend may have been kickstarted by the stamp duty holiday, it certainly looks to have cemented itself as a permanent feature of the market.”
Colin Bell, co-founder and COO, Perenna:
“While we celebrate the strong demand reflected in today’s findings, let us also acknowledge the significant elephant in the room – house price inflation. There are many positives to a strong and stable buyer appetite, but not when it causes homeownership to slip out of sight for a large proportion of a generation. Macro statistics like this do hide underlying concerning statistics at a micro level.
“Long-term fixes will be key to recovering from this affordability crisis as they help to buyers to spread their repayments over a longer period and reduce the risk to lenders. Offering more high loan-to-income and low-deposit mortgages will also aid these underserved house-hunters.”
Kevin Roberts, director, Legal & General Mortgage Club:
“Britain’s property market is enjoying its strongest start to the year since 2005, with buyers’ new-found preferences continuing to drive purchase activity.
“Relatively modest interest rates and the high availability of mortgages have also ensured that the market remains buoyant amidst strong house price growth and wider inflationary pressure.
“For anyone looking to move in the next few months, speaking to an independent mortgage adviser now could be a wise move to lock into a top deal as rates and affordability rules are likely to shift. Advisers not only offer a specialist insight into market activity, but also access to many deals that are not available direct with lenders.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
‘Rapidly rising asking prices are one thing but transactions are quite another and always a better measure of property market health.
“These numbers are no exception and confirm clearly what we have been seeing in our offices – the continuing lack of stock is constraining activity and only supporting the acceleration in prices.
“The good news is that listings are on the up, prompted by the increase in energy prices and interest rates. This should help to better balance supply and demand, as well as keep prices in check.’
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“There were fears that the housing market would suffer a hangover in January after such a busy 2021 and in terms of number of transactions, there has been a noticeable dip.
“Borrowers remain keen to take advantage of cheap mortgage rates as rising inflation suggests that more interest rate rises could be on the cards. However, finding the property they want to buy could be the big challenge.
“Even if the Bank of England raises the base rate again at its next meeting, it looks as though we will remain in an ultra-low interest cycle for the foreseeable future and any increase in mortgage costs will be slow and steady.”
Paul Stockwell, chief commercial officer at Gatehouse Bank:
“Property transactions have settled back to their pre-pandemic levels, and the short supply of homes for sale is likely to hold back any significant growth in sales volumes in the first months of this year.
“Despite the supply problems, there’s still plenty of buyer demand, with would-be buyers queueing up to view properties. Hopefully sellers will start to enter the market in greater numbers in the spring, for what is traditionally a busy period for housing.
“We are still seeing high demand from buyers, despite the wider economic uncertainty from inflation, which points to the strength and resilience of the property market. That said it’s unlikely we’ll see transaction levels in 2022 reach the highs achieved last year.”
Emma Cox, MD of real estate at Shawbrook:
“Anyone that’s been scanning property websites or estate agent windows will tell you that supply in the market is low, and competition fierce. This limited supply has prompted house buyers to act quickly, and transactions remain high.
“However, with prices continuing to soar and wage inflation failing to keep pace with the rising cost of living, there are concerns that transactions will begin to tail off later this year. Indeed, more and more people are being shut out of the market, with the average house price in the UK reaching £275,000 and in London a staggering £521,000.
“While, some lenders are introducing 95% LTVs to help first-time buyers onto the ladder, more needs to be done to support the property market going forward. Supply is a key issue, and we need to see more commitment from the government in order to boost the housing stock in the UK and support more buyers with their property ambitions.”
Tomer Aboody, director of property lender MT Finance:
“A real shortage of properties on the market is continuing to fuel higher prices, with multiple buyers per property on many occasions.
“This time last year, buyers had the stamp duty holiday to spur them on; now there are fewer sellers brave enough to put their properties on the market as they are fearful that they will not be able to buy themselves.
“Many are selling up and moving into rented accommodation in order to put themselves in the strongest position by being cash buyers, which in turn is also pushing up rents.”
John Phillips, national operations director at Just Mortgages:
“Statistics always need to be taken with a pinch of salt and the transactions data from January was a perfect example of why that is true.
“Seasonally adjusted figures showed an increase month-on-month, but non-seasonally adjusted pointed towards a significant drop in activity.
“The truth – as is usually the case – lies somewhere in the middle. Activity is beginning to settle into a natural rhythm as the fall-out from the stamp duty holiday spikes begin to settle. The number of transactions is slightly up from pre-pandemic January, so it is hard to argue that the market is not in good health.
“One potential issue on the horizon is the rising cost of properties. A record increase was recorded from December to January, and with the cost-of-living crisis set to bite in April, affordability may become an issue.
“This said, the market is still proving its resilience, people are still looking to purchase properties and with interest rates set to increase over the next few years, advice from brokers will remain crucial.”
Richard Pike, Phoebus Software sales and marketing director:
“Looking at the non-seasonally adjusted figures from HMRC today we are starting to see the trend that we were probably expecting last month. As the economy recovers, more quickly than we might have imagined according to the latest PMI survey, there is a much greater likelihood of another interest rate rise. This is perhaps the only thing that may curb the rate at which house prices continue to rise. The latest monthly report from Rightmove showed that prices had reached a 20 year high, which has to be putting many first-time buyers’ ability to get onto the property ladder almost out of reach.
“Recovery, rising prices and rates. All in all it’s difficult to predict where the housing market will go next. Suffice to say that it cannot go on the way it is. The disparity between those that have and those that want to have is getting greater all the time.”
Jonathan Stinton, head of intermediary Relationships at Coventry Building Society:
“2021 was the busiest year for property transactions since 2007, with increased demand causing surges in activity throughout the year.
“While we’re expecting to see more consistent activity levels in 2022 due to issues like limited housing stock, it seems that the market is thriving already, with home buyers and movers very much in the mind set of ‘New Year, New Home’.
“Brokers will surely welcome the strong start to the year and the opportunities that it will bring, particularly within the remortgage and first-time buyer markets. It remains to be seen if these high transaction levels will be sustainable throughout the year, but it looks like for now, the property market is still very much on the up.”
Karen Noye, mortgage expert at Quilter:
“While house prices continue to increase, albeit slower than they have done in previous months, the number of residential transactions seasonally adjusted in January 2022, is 10.6% lower than January 2021 illustrating a market that is finally starting to slow. In spite of the pandemic, over the last two years the housing market has ignited like never before and the huge rush to buy has been a major contributing factor to the record house prices we are currently seeing.
“This provisional data does however illustrate that the number of seasonally adjusted residential transactions for January, which is 106,990, is the second highest since 2016 when there were 104,090 residential transactions. This all pales in comparison to January 2021 which takes the top spot with a huge 119,660 transactions.
“However, it now feels like we are in a very different fiscal position with inflation and a cost-of-living crisis squeezing people’s finances and interest rates also on the rise. While there will be residual movement in the housing market as a result of people still adjusting to post-pandemic working rituals there will likely be an inevitable slow down over the next year.
“As interest rates rise and money is less cheap to borrow it may start to put off prospective buyers and as a result drive down the number of transactions. Saying that, house prices could remain high for some time as there continues to be a dearth of housing stock meaning people are still paying over the odds for property.”
Paul McGerrigan, Loan.co.uk’s CEO:
“It’s no surprise that this January’s volume of property transactions are comfortably lower than last, owing to the fact there is no government tax relief as there was in 2021. However, when considering the seasonally adjusted figures, the rise of 5.1 per cent from December to January shows the interest rate increase in December did little to dull the market appetite.
“It’s clear that desire for property is still high, fuelled mainly by house-hunters’ desire for increased space and the supply of new properties coming onto the market is still woefully short, driving prices upward.
“The crux of the future performance in 2022 is where demand meets rising interest rates, inflating fuel costs and other price hikes which still continues to put pressure on wallets. Transactions may well cool off in the coming months until the uncertainty of unknown price hikes is resolved.”
Lawrence Bowles, director of research at Savills:
“It’s no surprise we’re seeing transaction activity start to ease back. Last year’s stamp duty holiday is now a distant memory, and a slowdown in the number of homes listed for sale means it’s looking more and more like a seller’s market. Figures from TwentyCi show the supply of homes for sale is -10% below the 2017-19 average.
“As a result, nine out of 10 buyers say that the lack of available housing stock is having a negative effect on their ability to purchase a property. However, agreed sales are running 11% higher than pre-pandemic levels.
“That imbalance in supply and demand will continue to put upward pressure on values, though rising mortgage rates will impact affordability and ultimately slow potential growth. We’re predicting average UK house prices will rise 3.5% this year and 13.1% by 2026.”
Ross Boyd, founder of the always-on mortgage comparison platform, Dashly.com:
“January 2021 was a tough act to follow given the massive surge in transactions caused by the Stamp Duty holiday and the changing property needs brought on by the pandemic.
“The property market remained strong in the closing stages of 2021 and that has continued into 2022, but transaction levels are being hindered by the sheer lack of supply. The lack of stock, coupled with the cost of living crisis, interest rate rises and impending tax hikes means transactions are likely to be steady rather than stellar in 2022.”
Andrew Montlake, managing director of the UK-wide independent mortgage broker, Coreco:
“The Stamp Duty holiday put the market on steroids when it was launched and the tax relief, coupled with an abject lack of stock, explains why January 2022 was down in comparison to the same month last year.
“There are many red flags ahead in 2022, especially with rising interest rates and soaring inflation, but borrowing rates remain exceptionally low and rents are soaring. People are more keen than ever to get out of the rental market and own and that will be a major driver of transactions in 2022.”
