The number of residential transactions in March stood at 110,990, up 18.2% on February, the latest Government transactions figures show.
Whilst this is some 36.2% lower than March 2021 that month marked the original withdrawal date of the stamp duty holiday which triggered a surge in transactions.
Kevin Roberts, director, Legal & General Mortgage Club, said: “Despite the pressure on borrowers caused by the rise in the cost of living, demand remains high and the overall outlook for the market is strong. This is another clear reminder of the resilience of the current housing market and its ability to weather difficult conditions.
“Even as the market experiences a healthy spring, the more complicated conditions mean that the role of advice is now more important.
“Borrowers may well need more support and reassurance to find the right mortgage for their needs. This is an opportunity for advisers to really demonstrate the scope of their expertise and add value, during what will be a pivotal time for their clients.”
Iain McKenzie, CEO of The Guild of Property Professionals, added: “Home sales continue to inhabit a parallel world to all the economic indicators, with March transactions up almost a fifth on February.
“Home moves are down year on year, but only because of a rush to buy in March last year caused by the impending end of the popular stamp duty holiday.
“The industry continues to see a lack of properties on the market, which is pushing up prices across the board.
“Demand remains high, and the market looks likely to keep moving upwards as it continues to ignore all the uncertainty in the rest of the economy.”
Reaction
Andrew Montlake, managing director of the UK-wide independent mortgage broker, Coreco:
“The Stamp Duty holiday has distorted the data so it was inevitable that transaction levels in March were down fairly significantly on the same month last year.
“To make matters worse, there is an extraordinary lack of stock. Transactions need buyers and sellers and there is a distinct lack of the latter.
“Moving forward, households face countless headwinds during 2022, primarily in the form of rising interest rates and soaring inflation, and these are likely to restrict transaction levels. However, tenants remain desperate to get out of the rental market, as rents hit new highs, and this will maintain a certain level of transactions.
“The ongoing rush to get out of the rental market may also explain why transaction levels in March were up on February.”
Andrew Simmonds, director at Bristol-based Parker’s Estate Agents:
“It’s been a slow start overall to 2022, with transactions being limited by the sheer lack of stock and people staying indoors during the winter months.
“On top of that, the Stamp Duty holiday was in force a year ago so that will have skewed the data. However, the past few weeks have seen an increase in new instructions and buyers seem to have become more active again.
“As the weather improves, so does the property market by and large. There is still limited stock and that is hampering transaction levels. As ever, properties for sale at the right value sell very quickly.
“Despite the worrying global backdrop and inflation coupled with a slowing economy domestically, I am not seeing as much nervousness as some would make you think. I believe the next quarter will show a strong transactional market as the spring and early summer are often a key time to buy and sell homes.”
Graham Cox, founder of the Bristol-based Self-Employed Mortgage Hub:
“There’s still plenty of demand from buyers, but it’s mixed in with a nervousness about increasing mortgage rates, and potentially falling house prices. It’s not a popular view, but we really do need UK property prices to fall in real terms.
“Imagine how much stronger the economy would be if we didn’t need to spend so much of our disposable income on mortgages and rent.
“Businesses would be able to charge less for goods and services, and consumers would have more spare cash to pay for them.
“And young people would finally have the chance to get onto the housing ladder without signing up for a lifetime of debt servitude. That it’s come to this is a national disgrace, frankly.”
Kate Allen, owner at Devon-based luxury holiday lettings specialist Salcombe Finest:
“The pool of demand is still deep, but the current is weakening with fewer people registering their interest in purchasing a property.
“Make no mistake, the great readjustment will soon be upon us. Already the oversupply and overpricing of self-catered holiday homes is becoming apparent.
“With swathes of availability across Airbnb and rental income plummeting, additional stock will flood the market as those buy-to-let mortgages fail to stack up, or homeowners start defaulting on mortgage repayments.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Transactions are usually a better measure of housing market health than more volatile prices – but not in this instance.
“These figures reflect sales which mainly took place a few months ago when activity was more lively. At the sharp end, we have noticed that since then the rising cost of living and interest rates, especially for those on tight budgets, are contributing to an easing of price growth and a drop in sales.
“Demand still comfortably exceeds supply and correctly-priced houses continue to attract considerable interest while mortgage repayments remain relatively affordable.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Demand for mortgages is strong as rates remain competitive, even as Swap rates continue to rise.
“Some heat has come out of the purchase market compared with this time last year which is no surprise and is welcome as that frenetic pace could not continue. Remortgaging activity is strong as borrowers attempt to lock into low mortgage rates before they disappear.
“There are concerns that rising living costs will impact lenders’ affordability calculations when it comes to getting a mortgage, making it more important than ever to seek advice.”
Tomer Aboody, director of property lender MT Finance:
“With higher transactional volumes in March compared with February, could this be the turning point with spring and summer upon us when the market finally gets some stability and pricing normalises?
“Putting the numbers in perspective, volumes are much lower than March 2021, which is the reason why there has been such a significant increase in property values. The difference last year was that the stamp duty break encouraged many would-be sellers to get on and sell, suggesting that a revamp of stamp duty is needed to stimulate activity in the market.
“Non-residential transactions are still trailing behind their residential counterparts, due mainly to tax changes introduced by the Government to steady the ship with regard to investors, which in turn has pushed up rents.
“With the retail sector impacted by the rise in online sales, changes to, and reform of, business rates are needed to encourage retailers to return to our high streets.”
John Phillips, national operations director, Just Mortgages:
“Spring has brought a surge of transactions as the property market continues its positive momentum.
“The year to date has seen the most transactions since the credit crunch and the recent figures demonstrate the underlying strength of the housing sector.
“Looking ahead the cost of living crisis will certainly impact some buyers and may cause others to put plans on pause.
“This said, there is still an imbalance of buyers versus sellers, with more purchasers still tipping the scales and this competition for properties is driving house price growth.
“With an estimated £95bn of mortgages up for remortgage in 2022, alongside the purchases, brokers will also be busy supporting clients to remortgage.”
Karen Noye, mortgage expert at Quilter:
“UK monthly property transactions have continued to slow, though pre-pandemic norms remain a long way off. March saw a relatively small seasonally adjusted increase of 2.6% on February’s transactions, but year on year there was a 35.7% drop compared to March 2021 numbers. Though this seems a significant fall, it is important to note that March 2021 was the original withdrawal date of the stamp duty holiday and thus saw a huge uptick in sales as people pushed to secure the savings.
“In comparison to the height of the rush to buy witnessed over the past couple of years, transactions do now appear to be slowing. However, the seasonally adjusted residential transactions for March, 114,650, remains very high in comparison to pre-pandemic numbers. Over the last 10 years, March transactions were only higher in 2021 and 2016, both of which saw an increase due to forestalling.
“While the property market has defied expectations so far and property transactions remain high at present, we are likely to see a fall in sales over the coming months. Soaring inflation, the rising cost of living, high energy bills and a lack of support from the government at last month’s Spring Statement mean many people are feeling the squeeze financially.
“The recent introduction of the new energy price cap and the national insurance increase has further heightened the pressure. With wages failing to keep up, the increased costs of moving home will likely put off prospective buyers and taking a first step onto the property ladder will be pushed out of reach for many, and the number of property transactions could well be driven down as a result.”
Richard Pike, Phoebus Software sales and marketing director:
“An 18.2% monthly increase in March on the back of a 15.3% rise in January shows a healthy start to the year for housing transactions.
We are starting to see more properties for sale coming onto the market although they remain in low numbers but buyer demand is still strong.
“The latest data from RICS shows a slight increase in homes coming onto the market in March for the first time in 12 months, coinciding with buyer enquiries also rising at a similar level. I expect housing transactions to continue to rise during the spring and going to summer as is traditionally the case.”
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:
“The UK property market remains buoyant with soaring prices and the cost-of-living squeeze yet to dampen people’s appetite for new homes. Comparisons with last year are tricky with the stamp duty holiday and the pandemic race for space causing a huge surge in activity but while the number of transactions is down on this time last year, it is still a massive 18% up on last month’s figure. Provisional figures for the 2021/22 tax year also show the highest financial year total since the pre-Financial Crisis property boom.
How long the market can maintain this momentum remains to be seen as there are significant headwinds incoming. Sellers may be keen to put their homes on the market to capitalise on rising prices, but they may find there is less interest in the coming months with interest rates pushing up mortgage rates and people increasingly tightening their belts to deal with soaring bills. With more interest rate increases on the horizon and inflation showing no sign of letting up, the coming months could show would-be buyers looking to shelve potential home purchases until the financial outlook settles down.”
Jonathan Stinton, head of Intermediary Relationships at Coventry Building Society:
“A busy property market is good news for brokers and lenders but it brings service levels to the forefront of everyone’s mind. We’re seeing similarly high levels of activity in April indicating a strong Easter period too.
“Clients will be keen to act quickly as prices continue to rise, while finding time for even more appointments will add pressure to brokers’ already busy schedules.”
