Residential transactions increased by 4.4% in August 2022 to 114,440, according to the latest data from HMRC.
As such residential transactions are now 9.7% higher than August 2021 and 4.4% higher than July 2022.
Non-residential transactions stood at 9,930, 5.3% higher than August 2021 and 1.7% higher than July 2022.
Reaction
Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco:
“Transaction levels in August showed there was life in the property market even as the cost of living crisis went from bad to worse.
“First-time buyers are especially active, as they are keen to exit the rental market where rents are breathtaking.
“Even though we are likely to get a chunky rate rise this week, for many people it will still be cheaper to own than to rent and that’s driving activity. News that stamp duty is set to be cut is likely to light a match under transaction levels.
“However, if it send prices higher again, this will certainly not help first-time buyers who are already facing rapidly rising mortgage rates and cost of living increases.
“Get it right however, and in the medium to long term we may just see a market with more transactions rather than one where stamp duty acts as a further disincentive to move.”
Edgar Rayo, chief economist at London-based finance broker, Finanze:
“With Truss’s recent announcement of a stamp duty tax cut, we’re expecting transactions to rise once it takes effect. It will reinject buyer confidence into the housing market after the nil rate band returned to £125,000 last year.
“With the government introducing more fundamental reforms that encourage growth in transactions and support credit-constrained households that are heavily exposed to income volatility, we’re seeing an increase in real estate activity as an effect.
Emma Hollingworth, distribution director, MPowered Mortgages:
“Today’s transaction figures reflect the continued strength of the property market, despite significant headwinds.
“As the cost-of-living crisis persists, the market is showing every sign of resilience but within the current inflationary environment, and with interest rates continuing to rise, ensuring transactions run quickly and smoothly is going to become increasingly important – and tech has a big role to play in this.
“With another potential rise in interest rates tomorrow, it remains paramount that the industry also continues to support homebuyers and remortgagers by reimagining the homebuying journey with efficiency and affordability at its heart.
“At MPowered Mortgages, our suite of prime residential products, for example, includes cashback options, a free valuation on every application, rolling end-dates and no arrangement fee options, all designed to lessen the financial pressure of buying and remortgaging a home.”
Malcolm Davidson, director of Hull-based broker, UK Moneyman:
“There is a lot of talk of supply and demand but unless you are working at the “coalface” such as estate agents and mortgage brokers I think you would be quite shocked to see just how extreme the mis-match is at times.
“As recently as last week, a client of mine was one of 30 people offering on a standard two-up two-down property valued at £140k. I think for first-time buyers the decision is still easy, if they can afford to buy they will continue to do so.
“For home movers, the decision is more nuanced. They are taking out a bigger mortgage most probably and a larger property means larger bills. Apply a higher rate of interest to that bigger mortgage and a higher cap to the extra energy required and often you will come up with the answer: “Shall we just stay put and wait and see what happens?”.
“This means less supply but demand at the bottom end remains high and this is what is supporting property values, which are up 20% since Covid alone. Don’t forget Help to Buy is ending soon, too, and nothing to replace it has yet been announced.”
Rhys Schofield, managing director at Belper-based Peak Money:
“People still want to move and for all the talk of rate rises putting buyers off, the alternative is renting and that only increases when rates go up, too. Don’t forget most landlords have a mortgage.
“September has still been very busy despite ending up with two bank holiday weekends. We may have had a bit of a lull in activity last week but things have certainly been hectic since everyone came back to work on Tuesday.”
Mark Robinson, managing director of Southampton-based Albion Forest Mortgages:
“We are still finding the market incredibly busy, with absolutely no signs of slowing down at all! For now at least, people are just dealing with interest rate rises and the cost of living.
“Curiously, I think with the cost of living crisis, and rent increasing across the board, more people will be looking to ways to get onto the property ladder.
“We are seeing an increase in Joint borrower sole proprietor enquiries and parents using Equity Release products to try and get a deposit together for their kids. Ultimately people will grumble about rates being high, but most will just accept them and go ahead with their purchase anyway.”
Rob Gill, founder of London-based Altura Mortgage Finance:
“Our transaction levels in August were the highest of the year so far, a very unusual scenario indeed.
“Rocketing mortgage rates seem to have persuaded mortgage borrowers to interrupt their holidays and get on with securing a mortgage deal, whether it be for a purchase that might otherwise be out of reach or a remortgage that could help offset other rising living costs. There’s no sign of this trend slowing down, especially with the Bank of England tipped to hike the base rate significantly again in September.”
Richard Pike, chief sales and marketing officer at Phoebus Software:
“Once again the figures from HMRC show that the market continues to perform well. A good sign in the face of everything that is going on both here and across the world.
“This will be a pivotal week economically with interest rates expected to rise by another 0.5%, or even 0.75%, and the mini budget on Friday anticipated to include measures to not only ease the pressure on finances but also to reduce stamp duty. A move that could guarantee the current momentum continues.
“Given the announcement this morning regarding the energy assistance package for businesses it appears that our new Prime Minister and her cabinet are taking notice and making good on the promises made during the election process. It is a balancing act of course, and one that will cost the country in the long run, but for now we will take all the help we can get. It’s going to be an interesting couple of days.”
Rob Peters, director of Altrincham-based Simple Fast Mortgage:
“It’s been a funny year. There wasn’t a summer slowdown or August holiday lull as savvy buyers pushed ahead to secure properties and cheap rates while they could.
“September has seen buying activity tail off slightly in some areas of the market such as aspirational buyers or second home hunters.
“First-time buyers continue to lead the charge with buying being a necessity in many cases. Market forces simply aren’t yet strong enough to deter them. However, a 0.75% Bank of England interest rate increase will remove mortgage affordability for some and I expect to see a slow down in the final quarter of 2022.”
Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial:
“All we hear in the news is the ‘cost of living crisis’ and that sentiment has fed through to confidence in the housing market.
“Homeowners can feel a recession coming and that means there is no confidence to commit to big purchases like new homes.
“Interest rate rises compound that sentiment and this is why I expect transaction levels to further dry up in the latter part of the year. 2023 will be slow as the economy goes through its transition. I don’t expect to see forced sales as the FCA changed affordability criteria in the wake of the 2008 financial crisis.”
Gareth Lewis, commercial director of property lender MT Finance:
“With estate agents reporting that transactions are taking longer to get over the line, thanks to interest rate rises and mortgage deals being pulled before buyers can proceed, transaction numbers could well dip in coming months as it all becomes too much hassle.
“With interest rates likely to rise into the new year, would-be buyers doing the sums will see that their monthly payments will be that much higher, putting them off buying property.
“As transactions take around three months, these figures reflect activity from earlier in the year. It will be interesting to see where the stats lie come the end of the year once higher living and mortgage costs have had an impact.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Write off the housing market at your peril. These figures show once again the resilience of buyers and sellers despite the rising cost of living and interest rates.
“Despite the anomalies arising from comparisons with last year, sales are still broadly in line with historic pre-Covid August averages. Transactions, rather than more volatile house prices, are always a better indicator of future activity.
“There is no sign of any correction in prices yet but clearly the government is sensitive to even a relatively small drop in transactions, prompting talk of lowering stamp duty.”
Avinav Nigam, co-founder and chief operating officer of real estate technology platform IMMO:
“Housing transactions are a good indicator of consumer confidence, and because they also affect house prices, hint at how well the economy is doing. Transaction numbers have returned to pre-Covid levels as the market settles, which is good news.
“The increase in August, however, is down to the buoyant market in the spring when interest rates were lower, and those pre-agreed deals being transacted now. The bigger reason may be the distortion in the market created by the stamp duty holiday last year, with buyers bringing forward transactions to take advantage of full tax savings before the end of June 2021.
“However, successive interest rate increases, the affordability crisis, spiralling house prices, and talks of a recession are expected to hurt transactions in winter months unless some financial support is provided or the fundamentals improve.
“The trouble with fewer transactions in winter, combined with unaffordable house prices, is that households will be forced to rent. We already see shortages in rental housing force rents up. There’s a growing need for professional landlords to offer safe, affordable and quality rental properties in the UK.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“With the MPC expected to announce at least a 50 basis points increase in interest rates this week, and some forecasters expecting a 75 basis points rise, there is more pain to come on the rate front, which will inevitably impact transactions.
“The majority of homeowners are insulated from rising interest rates as they are on fixed rates. We have seen an uptick in enquiries from borrowers on fixed-rate deals who are prepared to pay exit penalties to get out early and secure a new deal before rates rise further. However, this may not be the best course of action depending on the borrower’s current rate and how long is left to run on it, so it is important to seek advice.”
