The latest figures from HM Revenue and Customs (HMRC) indicate a downward trend in UK residential property transactions for October 2023.
The provisional non-seasonally adjusted estimate shows a total of 90,920 residential transactions, marking a 17% decrease from October 2022 and a slight 2% drop from September 2023.
When adjusted for seasonal factors, the number of residential transactions stands at 82,910, which is 21% lower than the same month last year and 3% lower than the previous month.
In contrast, the non-residential transaction count presents a different picture. The provisional non-seasonally adjusted figures show a 5% increase in transactions over both October 2022 and September 2023, with a total of 10,280 transactions recorded.
The seasonally adjusted data for non-residential transactions is 9,930, which is marginally lower than October of the previous year by less than 1%, but shows a 3% increase from September 2023.
These statistics are part of HMRC’s National Statistics release, providing monthly provisional estimates for residential and non-residential property transactions across the UK and its constituent countries.
The decrease in residential transactions continues the trend observed in September, while non-residential transactions demonstrate some resilience with a slight upward movement.
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Chris Little, chief revenue officer at finova:
“Until we see a marked fall in mortgage rates, property transactions are only likely to get worse before they get better. Stubborn inflation threatens to extend the UK’s cost of living crisis into 2024, and budgets are still squeezed as many borrowers have dipped into their savings to make ends meet. Stabilising swap rates do suggest that mortgage rates could eventually be on a steady decline, but this turning point is still a few months away. All eyes will now be on the last few months of the year, and whether the data will show the usual end-of-year flurry of activity or a more probable winter slump prompted by affordability concerns.
“For lenders, it’s crucial that they continue to prioritise customer retention and address their clients’ changing financial needs into 2024. Many firms are starting to become nimbler and more dynamic in their product offering, and they must continue to enrich their processes with technology, not only to make better-informed affordability decisions but to price products with speed as the market continues to evolve.”
Alex Lyle, director of Richmond estate agency Antony Roberts:
“As there isn’t the depth of demand in terms of enquiries from prospective buyers compared with the start of the year, property must be priced at the right level.
“Our business is all about confidence and two consecutive holds in interest rates have been extremely welcome, helping buyers plan for the future.
“Transactions are taking time and negotiations can be drawn out. But there are opportunities for buyers who are brave enough not to sit on the fence with a window now before Christmas where competition is more muted and vendors more realistic.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Transaction numbers have slipped again in the face of higher interest rates and the cost of living, as borrowers reassess what they can afford to pay.
“Encouragingly, the direction of travel for new mortgage rates is downwards, with fixed rates looking increasingly attractive. However, borrowers do have to accept that they will pay considerably more now than in the heady days of sub-1% mortgages.
“If the Bank of England holds rates again at the December meeting, this will further reinforce the belief that base rate has peaked.”
Ben Waugh, managing director at more2life:
“Another dip in property transactions is likely to cause some concern. However, we must keep in mind that this is a reflection of the ongoing cost of living crisis and economic uncertainty. Looking ahead, there may be some green shoots for aspiring homeowners, with interest rates stabilising and inflation slowing.
“The mortgage market is reassuringly resilient, and we are seeing many homeowners – often with fixed pension incomes – considering how they can augment their retirement income. In times such as these, equity release can be a great option, with products also available to facilitate gifting younger generations who might be taking their first steps on the property ladder. For individuals deciding whether releasing equity is the right choice for their personal circumstances, it is crucial they seek independent financial advice.”
Ken James, director at London-based independent mortgage broker, Contractor Mortgage Services:
“The debacle that was the Liz Truss administration muted the property market throughout much of 2023 and is evident in this data, but we have seen a marked improvement in the last quarter of the year. Mortgage rates constantly creeping down and the base rate not increasing are boosting confidence. However, the market remains on thin ice. Cracks in the economy could appear at any time and the ground could rapidly shift beneath our feet. There will be a lot of pent-up demand that has the potential to drive transaction levels in 2024 but in this day and age sentiment can turn very quickly.”
Stephen Perkins, managing director at Norwich-based Yellow Brick Mortgages:
“In terms of property transactions, 2023 and 2022 were worlds apart. This data reflects the period when monthly base rate increases really started to challenge the housing market and hit sentiment hard. Completions on the whole are also taking a lot longer so this data may also reflect the fallout from the mini-Budget. Additionally, there are backlogs at the Land Registry, which could be impacting these figures based on stamp duty returns. With lenders now heatedly competing for market share, we are seeing a definitive uplift in enquiries from purchasers and so the data should be far stronger next year.”
Steven Hargreaves, mortgage and protection adviser at Leeds-based The Mortgage Co:
“The rollercoaster of 2023 is coming to an end. The first six months of the year were definitely slower than the same period in 2022 due to the Liz Truss mini-Budget hangover. That appears to be showing through very clearly in this data. It’s important to note, however, that there is a lag in these figures and that they not tell us what is happening today. The interest rate war that has been raging for the past couple of months is having the desired effect. As fixed mortgage rates fall, mortgage enquiries are increasing. The property market came to life in October and November, which bodes well for 2024.”
Wes Wilkes, CEO at wealth manager, Net-Worth NTWRK:
“In transactional terms, the property market overall has been very subdued in 2023. With 1.5 million consumers coming off fixed rates in 2024, the first half of next year could well see this trend continue despite the fact mortgage rates have been edging down as people recalibrate to the new rate environment they find themselves in. The consensus now is that we are past the peak of rate rises but the full effects of those rises have yet to filter through. Looking at affordability overall, you suspect house prices are still a little overvalued so could fall further over the next 12 to 18 months but nothing like in the financial crisis of 2008.”
Craig Fish, director at London-based independent mortgage broker, Lodestone Mortgages & Protection:
“The year started on a low, gained momentum, and then the brakes were slammed on as lenders simply didn’t want to lend. It’s therefore of no surprise that this data is showing a slowdown, as it now starts to cover the period of the year that was most affected. Thankfully, things are now improving, and slowly reducing mortgage rates have set in motion a thaw that isn’t normally seen until early spring. If things continue as they currently are, with more positive economic data, and a General Election on the horizon, I strongly expect that 2024 will surpass this year. That said you just never know what is around the corner, and with the UK economy being so fragile, you have to expect the unexpected.”
Darryl Dhoffer, director at Bedford-based independent mortgage broker, The Mortgage Expert:
“Apart from October when mortgage approvals increased, 2023 overall has been very muted compared to previous years, and I expect 2024 to remain equally so, with transactions similar to or slightly lower than in 2023 due to the ongoing cost of living crisis and impact of mortgage rate shock.”
Malcolm Davidson, director at Hull-based independent mortgage broker, UK Moneyman:
“Many commentators are predicting 2024 to be fairly similar to 2023, a world dominated by mortgage product switches and a flat purchase market. Whilst this might not sound too exciting, perhaps we can’t have it all ways. After all, what most business owners crave in order to be able to plan effectively is a stable market. With mortgage rates looking like they will level out between 4% and 5% and Zoopla saying property values will flatline again, maybe we will get exactly what we wished for.”
Gareth Lewis, managing director of property lender MT Finance:
“Although transactions have dipped, volumes haven’t fallen off a cliff with people still buying and selling, which is positive. The numbers are what you would expect given the higher interest rate environment, which creates affordability issues, but borrowers are gradually getting used to this.
“The stabilisation of the interest rate environment will encourage more people into the market. Better mortgage products at sub-5 per cent are also helpful, while lenders need to think outside the box in order to support borrowers as best they can.
“As we move into a better environment for interest rates and consumer confidence, a Government incentive in the new year to get people to transact would be a further move in the right direction”
Nick Leeming, chairman of Jackson-Stops:
“The market is embracing greater realism on pricing, reflecting a market that is more balanced with buyers now in the strongest negotiating position in five years.
“Today’s figures reflect this shift, showing a small drop in transaction numbers from the previous month as the market continues to adjust. Comfortingly however, these figures are not too dissimilar from the transaction volumes seen in August 2020.
“It’s easy to suggest that a slowdown of any extent is bad news for the market, but the minimal month on month fall amidst a backdrop of stubborn inflation and high mortgage rates is a ringing endorsement for the resilience of the property market and buyer and lender confidence.
“Our national network of agents tells us that transaction numbers and buyer appetite is heavily driven by location and local supply, in which competition for well connected, prime properties is continuing to hold house prices firm. For the right property at the right price, there remains a sense of urgency in deals right across the country underpinning market confidence.
“The South West and commuter towns across the South East and East continue to lead the way in the number of new buyers per new listings. This suggests that the pandemic race for space and shift away from primary city living has not wholly been forgotten, even with office working becoming a more consistent requirement from businesses again.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“It’s easy to focus too much on price movements when it’s transactions which are a better test of housing market strength.
“These numbers are relevant as not only do they take into account mortgaged and cash sales, they demonstrate a clear determination among buyers to complete their purchases at a time when mortgage rates had not yet started to ease and inflation was still very high.
“Looking forward, we don’t expect any great fireworks this side of the new year with next year likely to continue in a similar fashion.”
Anna Clare Harper, CEO of sustainable investment adviser GreenResi:
“Housing transactions are down, which is unsurprising.
“Firstly, we are still coming down from a bubble caused by Covid and Stamp Duty reductions, which created double-digit house price growth for much of the past three years.
“Secondly, the higher base rate is designed to cool demand and therefore pricing in the economy, and it is working to plan.
“Sentiment is subdued across the property market. However, for investors it’s a time of opportunity since rental demand has never been stronger, and it is a good time to negotiate on purchase price.”
Karl Wilkinson, CEO at Access Financial Services:
“October’s data reveals a 21% decline compared to the same period last year, prior to the mini-Budget, with transaction figures expected to decrease further in line with winter trends. Additionally, we are currently 11.9% below the pre-pandemic surge of activity, which was largely buoyed by the Help To Buy scheme.
“Just this morning the industry has reported an uptick in mortgage approvals, surpassing expectations. This market’s most robust performance since July, would indicate a potential turning point in the housing market in the near future.
“Although we are still below the pre-pandemic levels, this positive trend is a promising sign of recovery and resilience in the sector. Advisers must continue to be ready to provide expert knowledge and advice to those looking to move or remortgage.”
Adam Oldfield, chief revenue officer at Phoebus Software:
“Reflecting the lower number of approvals over the last quarter the figures today were what was expected. However, seeing yesterday that approvals were up in October (BoE), perhaps the end of 2023 will prove to be more buoyant than we might have imagined a few months ago?
“Mortgage rates continue to fall, but when swap rates have increased a little in the last few days that trend may not continue at the same pace as we head to the end of the year. For borrowers though it will be the headline news that some two-year fixed rates have dropped below five per cent that may encourage more to fix. The performance in the market continues to see-saw and, with arrears continuing to rise, it’s going to be an interesting end to the year for lenders and brokers alike. The key, as ever, is to have all the right systems in place and make the most of whatever opportunities arise.”
