The latest data from HM Revenue and Customs (HMRC) reveals a 22% year-on-year decline in UK residential property transactions in November 2023, compared to the same period in 2022.
The provisional non-seasonally adjusted estimate shows that the number of residential transactions for November 2023 was 87,640, also marking a 2% reduction from October 2023.
Nathan Emerson, CEO of Propertymark, said: “2023 has not been without challenges for the housing market, with price fluctuations being a strong indicator of wider economic health.
“We have seen a brutal mix of high inflation and elevated interest rates knock consumer confidence across the year.
“Propertymark are positive the peak of the turmoil is now hopefully behind us; however, we must tread with caution over the coming months.
“We are currently seeing pockets of house price growth, which is reassuring, but to be fully confident this must be universally seen across the entire UK.”
Despite this downturn in residential transactions, non-residential property transactions present a more stable picture.
The provisional non-seasonally adjusted estimate for non-residential transactions in November 2023 was 10,250, a slight decrease from the previous year but a 4% increase from October 2023.
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Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Transaction numbers have slipped again in the face of higher mortgage 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 per cent mortgages.
“With the Bank of England holding rates again at the December meeting, this has further reinforced the belief that base rate has peaked and the next move will be downwards, which will provide a welcome boost.”
Tomer Aboody, director of property lender MT Finance:
“Less confidence in the housing market, along with higher mortgage costs, has resulted in a lower level of transactions as buyers and sellers were not motivated to transact.
“However, there should be more encouraging signs to come in 2024 as rates seemed to have peaked and inflation is reducing, which will hopefully translate into a stronger market with an uptick in transactions.
“Some assistance from the Government might be needed in order to persuade or encourage sellers to finally move.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“These transaction numbers provide a more accurate representation of market health than prices as they reflect cash and mortgage activity, although they are a little dated.
“Nevertheless, it’s clear buyers were not as deterred by interest rate and inflation volatility, which was so prevalent a few months ago, as we might have expected.
“We saw the same in our offices, which is a positive sign for the start of 2024 now that the cost of living and mortgage payments have started to fall and a little more confidence is apparent.”
Anna Clare Harper, CEO of sustainable investment adviser GreenResi:
“Ultimately, the 22% fall in housing transactions over the past year, is a logical result of two changes to demand. Firstly, demand has fallen from the artificial buying frenzy created by stamp duty reductions through Covid. Secondly, the higher base rate is designed to cool demand and therefore pricing in the economy, and it is working to plan.
“Essentially, policy levers have reduced households’ ability and willingness to buy homes. However, policy has no impact on people’s need for a roof over their heads.
“Housing need is being displaced into the rental market, and demand there is increasing dramatically. This is a structural trend influenced by factors such as migration, an aging population and shrinking household sizes, rather than a cyclical one. As a result, investors focused on real estate, and policies used to help solve the housing crisis must also focus on the long term.”
Karen Noye, mortgage expert at Quilter:
“The UK property market, still reeling from the challenges of 2023, is hopefully poised for a more stable year but this morning’s property transaction figures show quite how difficult a year it has been. The provisional data for November 2023, with residential transactions at 87,640 (non-seasonally adjusted) and 80,780 (seasonally adjusted), indicates a continued downtrend, 22% lower than November 2022 and marginally lower than October 2023. This points to a market grappling with high mortgage rates and economic uncertainties. But with interest rates looking likely to be at the very least more stable next year there is the potential for a gradual recovery in 2024 on the horizon.
“That said, house prices, after enduring a difficult 2023, may experience further dips in early 2024. The convergence of continued high mortgage rates will suppress buyer enthusiasm. However, the limited housing stock and elevated rental costs should cushion the market from a significant drop, leading to a modest decline in prices and even at times some modest increases. This dynamic could present opportunities for prospective buyers, particularly those looking to take advantage of any cut price deals from distressed sellers struggling with mortgage bills.
“The current slow market as evidenced by today’s figures, characterised by a ‘wait and see’ approach, may transition into a buyers’ market due to lower demand, potentially enabling savvy buyers to negotiate better deals. However, the overall market stability remains dependent on the Bank of England’s interest rate policies and broader economic factors.
“The rental market in 2024 is expected to remain tight, with limited availability and high rental costs. Landlords face increasing expenses due to a hostile tax environment, which could lead to an exodus of small-scale landlords, further straining the rental market. This could impact the availability and affordability of rental properties, with no significant relief in sight for renters.
“A critical factor to watch in 2024 will be the impact of sustained mortgage costs on homeowners. An increase in homeowners needing to downsize due to financial pressures could lead to a surge in market listings, potentially causing a more significant drop in house prices. This situation could create both challenges and opportunities in the market, affecting buyers and sellers differently.”
