The provisional non-seasonally adjusted estimate of the number of residential transactions in December 2023 stood 85,820, 20% lower than December 2022 and 2% lower than November 2023, according to the latest data from HMRC.
The seasonally adjusted estimate of residential transactions stood at 80,420, 18% lower than December 2022 and 1% lower than November 2023.
In contrast, non-seasonally adjusted non-residential transactions rose by 8% relative to November 2023, while seasonally adjusted figures were up by 3%.
The non-residential sector remained more stable than the residential sector, with seasonally adjusted figures 3% higher than December 2022.
Reaction:
Nick Leeming, chairman of Jackson-Stops:
“Despite today’s figures showing a subdued final quarter of 2023, a seasonal slowdown is par for the course as celebration and reflection takes priority in December.
“If last year was characterised by greater supply and tentative buyer appetite, the cautious hope is that 2024 will shepherd in a period of greater steadiness and predictability.
“Buoyed by falling inflation and competitive mortgage rates, a strong response from buyers to renew their searches and push forward with completions should also encourage sellers to return their properties to the market at realistic guide prices.
“On the eve of the Bank of England’s next interest rate decision, the expectation that rates will hold firm is another important piece of the property prosperity puzzle.
“If the Bank of England opts to err on the side of stability, it will go some way to help the market level out and return to a stable footing both in terms of sales agreed and property prices.
“Across the Jackson-Stops network in December we saw a notable uptick in the number of prospective buyers for new listings in the commuter belt around Reigate, Newmarket and Colchester, as well as in popular rural and seaside areas such as Blandford Forum, Truro and Taunton.
“This month-on-month swing shows that regional revivals can quickly emerge despite a more subdued national market.
“Pre-election promises are likely to dominate news headlines and see the major parties go head-to-head on divisive issues such as housebuilding, home ownership, rental legislation and green homes.
“However, any changes in property market conditions are much more likely to be determined by the persistent imbalances between supply and demand, which has outlasted the current Government and will leave a major headache for the next one.”
Adam Oldfield, chief revenue officer at Phoebus Software:
“In contrast to the more upbeat figures for mortgage approvals from the Bank of England yesterday, the latest residential transaction numbers are once again lower than the number of approvals would have us to believe.
“Of course, when it comes to transactions the timeline has to be considered. When most of these mortgages were approved in August or September, we were looking at a very different scenario.
“The base rate was still going up as were mortgage rates and inflation.
“If we look at the current number of approvals the outlook for the next few months is brighter than the picture painted by today’s figures.
“Of course, there is the question of what the Bank of England will do next.
“No one expects rates to come down quite yet and, as we have seen, swap rates have started to climb again recently.
“Lenders have been bringing rates down with better fixed rate deals back on the table.
“How long that will be the case is a big question and brokers will need to work quickly to secure the best deals for their clients, especially those that have moved onto much higher variable rates.”
Nathan Emerson, CEO of Propertymark:
“A drop in transactions at the end of the year is a usual seasonal trend but coupled with rising costs and in turn, consumer confidence taking a dip – it’s inevitable that this figure will be slightly lower than usual.
“However, we are seeing promising signs in the housing market as serious buyers remain active and with interest rates remaining static, affordability is improving.
“Propertymark now hope to see drops to inflation and the UK Government looking beyond just cutting inflation to restore confidence to the housing market.
“They must make it their mission this year to implement policies that can lead to a housebuilding boom and make homes more affordable.”
Clare Beardmore, director, Legal & General Mortgage Club:
“Despite a slower pace in December due to the holiday season, the market received an early gift in the form of a rates war, which has since captured the headlines.
“Falling swap rates – which determine mortgage pricing – have encouraged healthier competition among lenders, leading to a decline in average mortgage rates for the fourth consecutive month in December.
“The average mortgage rate now sits below 5%, helping to drive an increase in borrower enquiries.
“As we saw in Rightmove’s January data, there are green shoots in the housing market, with buyer demand up 12% against this time last year.
“We’re slowly edging towards spring – typically the busiest season for the housing market.
“The picture undoubtedly remains complex, but advisers are primed and ready to help buyers secure their dream home with the best product for their needs and circumstances.”
Andy Sommerville, director at Search Acumen, the property data and insight provider:
“The latest HMRC figures indicate that residential property transactions fell for the fourth consecutive month in December 2023, down 1% from November.
“We have seen a persistently challenging market in recent months as the property sector continues to cool under the pressure of high inflation and rising interest rates.
“Having said this, Christmas is always a slow month with fewer transactions historically, so underwhelming numbers are not necessarily an accurate reflection of market conditions.
“Looking at the year-on-year data, we can see some signs of the market stabilising after the initial shock of rapidly rising rates.
“In contrast, non-residential transactions, which saw a 3% increase this month, point to the sector weathering challenges better than housing. Investors seem more confident to transact despite economic headwinds and the higher cost of borrowing.
“With approximately €200m worth of real estate debt set to mature in 2023/24 in UK, France and Germany alone, the cost of borrowing and debt servicing will be the defining theme of 2024’s commercial real estate market.
“Continued volatility is likely until inflation and rates normalise, but monetary policy is showing signs of working to reduce inflation levels, with confidence slowly returning to the market.
“Overall, these figures reflect an uncertain economic environment where households and businesses remain wary and with good reason. Sustained growth will require not just macroeconomic improvement, but better leveraging of technology and data to enable smarter, faster transactions.
“Innovation is not just a nice-to-have, but an essential component to the recovery of the market. Integrating solutions like artificial intelligence (AI) could dramatically streamline processes and reduce costs, contributing to a stronger outlook for 2024.”
John Phillips, CEO of Spicerhaart and Just Mortgages:
“A drop in transactions in December will come as little surprise, as many potential buyers will have put their plans on hold in the run up to Christmas.
“It’s a similar story for the fourth consecutive month-on-month fall, as market conditions continued to impact the confidence and ability of many to push forward with plans – despite growing positivity.
“While it was far from an ideal end to the year, we have started 2024 on a really strong footing with high levels of buyer registrations and valuations being booked – the highest we’ve seen for a good number of months. New build lead numbers have also seen a strong start to the year too.
“Despite the recent inflation scare, there are many positive indicators for the market and the year ahead, and there’s no question potential buyers are beginning to respond to this and find some confidence.
“Whether they can find the affordability to match is another matter, and another reason why advice is so essential.
“There’s no doubt that affordability will continue to be a big factor this year. If brokers have ever needed a reminder to be proactive and remain visible in their local area, this is certainly it.”
Karen Noye, mortgage expert at Quilter:
“New data from HMRC shows that the end of 2023 witnessed a notable decrease in residential transactions, a trend attributed to the dampening effects of higher interest rates and a general sense of caution in the property market as a response to the cost-of-living crisis.
“Higher rates made the prospect of buying a home less attainable for many, leading to an 18% year-on-year decline in transactions by December 2023.
“The housing market has therefore been subdued, with activity slowing down considerably.
“This has had a knock on impact on the amount of tax the government are taking in from Stamp Duty.
“Other statistics out today show that residential property receipts in Q4 2023 were 4% lower than in the previous quarter, and 25% lower than Q4 2022.
“Reigniting the property market therefore might be something the Government is keen to do to and recent rumours of the return of 99% mortgages could be its attempt to get more first -time buyers into the market which helps boost transactions further up the chain too.
“However, as we step into 2024, there are burgeoning signs of optimism without the need for further measures.
“A critical factor contributing to this positive shift is the gradual reduction in mortgage rates. As these rates begin to lower, the financial burden on prospective homebuyers eases, making the dream of homeownership more accessible.
“This easing of mortgage rates is expected to inject newfound life into the housing market, fostering an environment where more individuals can afford to buy homes and these transaction figures start to rise again.
“Speculation around the Bank of England potentially lowering the base rate later this year has fuelled expectations of an even more favourable borrowing landscape.
“Such a move would likely lead to a further reduction in mortgage rates, thereby accelerating the housing market’s recovery by making financing more affordable for a broader segment of the population.”
Tomer Aboody, director of property lender MT Finance:
“Lower transaction volumes are further proof that some government intervention is needed in order to get the market moving.
“While interest rates are stabilising, leading to lower mortgage pricing, stamp duty is still the biggest outlay for any buyer and therefore, also the biggest obstacle.
“If there was to be some reduction in stamp duty, this would incentive sellers to finally move and increase the supply of properties coming to market.”
Anna Clare Harper, CEO of sustainable investment adviser GreenResi:
“Past transactions data from HMRC is a useful indicator of the health of the market, since it illustrates the strength of demand.
“A seasonally-adjusted 18% reduction in transactions compared with the previous December reflects the impact of higher interest rates, making both buying and owning a home more expensive for the majority, mortgaged property owners.
“It is a testament to the resilience of residential real estate as an asset class that in this context, house prices have hardly moved on average.”
Ben Waugh, managing director at more2life:
“The drop in property transactions last month demonstrates a seasonal lull, as can be expected during December.
“As we enter 2024, lowering rates will likely bring a flurry of buyers back to the market and we can expect an uptick in activity to start the year off well.
“The ongoing rates reductions and increasingly stable interest rates are a further sign that 2024 will turn a corner on the disruption of last year.
“This stability may encourage some existing homeowners with fixed retirement incomes to consider how they can augment their pension pot or gift to younger generations.
“A conversation with a professional adviser will help these individuals understand the opportunities that are available to them.
“There is an increasingly broad range of later life lending products entering the market, so it pivotal that borrowers come to an informed decision based on expert advice, tailored to their personal circumstances and financial needs.”
Kay Westgarth, director of sales, Standard Life Home Finance:
‘The foreseeable dip in activity over the festive period is no cause for concern. We can expect transactions to rebound in the January figures next month after what has been a healthy start to the new year for the property market.
“Interest rates coming down and inflation stabilising will likely be all the encouragement people need.
“Although affordability hurdles remain a key challenge, there is no doubt that opportunities are opening up in the market, particularly for first-time buyers looking to capitalise on these lowered rates.
“For homeowners over the age of 55 looking to lend a financial hand to loved ones taking this step, exploring options in later life lending could be a practical move.
“However, a comprehensive discussion with a professional adviser to evaluate all available and affordable options should be a priority.”
Emma Cox, MD of real estate at Shawbrook:
“After a challenging year, the slight dip in residential property transactions for December is a minor speedbump in an otherwise positive start to the year.
“It’s worth noting that December is typically a month when plans take a backseat due to the festive period.
“However, Zoopla’s latest house price index shows a 13% surge in agreed sales this month, indicating a renewed sense of confidence.
“This is particularly encouraging for professional property investors, given predictions of an upward trend in property prices.
“With strong tenant demand, limited supply, declining mortgage rates, and an optimistic outlook, it’s an advantageous time for landlords to continue investing in buy-to-let properties.”
Darryl Dhoffer, mortgage expert at The Mortgage Expert:
“These figures aren’t great but equally don’t come as much of a surprise. Higher mortgage rates in 2023 dampened buyer demand and affordability.
“On top of that, following a period of rapid price growth, the market underwent a natural correction in prices. 2023 could be defined as a cautious UK housing market.
“Any market recovery in 2024 hinges on interest rate stability, or better still cuts, and broader economic improvement. Yesterday’s insolvency data shows the knife edge the economy is on.”
Gareth Davies, director at South Coast Mortgage Services:
“These figures aren’t a shock to anyone in the industry. December 2022 completions wouldn’t have been hugely impacted by the Truss debacle, as many would have been set up way before the markets went south, and would’ve been in the final stages when it all kicked off.
“2023 saw many borrowers take stock and re-assess their desire to move and rightly so. However, in the tail end of 2023 and certainly so far in 2024, we have seen a huge uplift in people looking to return to the market and move house.
“Confidence is without question returning so take these figures with a pinch of salt.”
Ben Perks, managing director at Orchard Financial Advisers:
“The drop in transactions by nearly a fifth in December is a clear sign that confidence in the market was low during 2023, with higher mortgage costs deterring buyers.
“Many borrowers are waiting to see what happens and are not keen to jump at the rates on offer currently.
“Hopefully the Bank of England will choose to hold at 5.25% this week, which will help to provide stability and improve confidence.
“This should help the overall trajectory of rates and, as they get more competitive, and borrowers get used to the ‘new norm’, transactions should rise.
“The recalibration to the new rate environment has started but still has some way to go.”
Rohit Kohli, director at The Mortgage Stop:
“These numbers aren’t a surprise as transactions were very slow in the second half of 2023.
“What happens next is now key. January has already surpassed where we were in 2023 and confidence from buyers is improving, albeit still a little fragile.
“We should see an uptick in transactions this quarter. What the Bank of England does tomorrow and what giveaways the Chancellor announces in March to try to win the election will be key drivers of transaction levels in 2024.”
Graham Cox, founder at Self Employed Mortgage Hub:
“Transaction levels down about a fifth in December compared to December 2022 reveals the extent to which high mortgage rates have reduced buyer demand.
“This year, we’re likely to see an increase in supply as homeowners with unaffordable mortgages look to downsize or rent, and potentially more buyers too, as mortgage rates fall.
“I expect house prices to fall about 5% this year, possibly more if the UK falls into recession.”
Ranald Mitchell, director at Charwin Private Clients:
“These poor figures come as no surprise given how sluggish 2023 was after the disastrous mini-Budget and what it did to mortgage rates.
“With mortgage rates soaring and consumer confidence severely knocked, many elected to wait and ride out the storm, which is reflected in the drop in transaction levels.
“These figures don’t reflect the current market, though, where house buying activity is bouncing back and those who’ve previously stalled are re-approaching the market.”
Anil Mistry, director and mortgage broker at RNR Mortgage Solutions:
“Higher interest rates from the first to the third quarter of 2023 are likely to have significantly influenced the reduction in property transactions witnessed in the final months of the year.
“This trend suggests that potential buyers have been hesitant to commit to purchasing new homes or moving, deterred by the prospect of taking on costly mortgage debts.
“However, the consistent decrease in mortgage rates throughout the last quarter of 2023 presents an intriguing scenario.
“Should this lead to a resurgence in property transactions from January to March, it would hardly come as a surprise.
“This potential turnaround warrants close observation, as it could signal a pivotal shift in market dynamics.”
Andrew Montlake, managing director at Coreco:
“Transactions in December were noticeably down as many prospective buyers preferred to continue to adopt a wait-and-see approach until the new year.
“This has played out as January has seen a strong start in the levels of new enquiries for both estate agents and mortgage brokers, as buyers and sellers look to finally make that move that they may have put on hold for some time now.
“They have been stirred into action by softer prices and easing mortgage rates, knowing that given a continued lack of supply, prices look set to recover over the year as the uptick of demand continues.
“The housing market thrives on sentiment, and these latest figures showing market resilience will help to instil confidence in buyers and sellers alike, which should translate into higher transaction numbers as the year progresses.
“It is often all about timing, and a growing number of people believe that 2024 could just be the best time to buy in a while.”
Justin Moy, managing director at EHF Mortgages:
“It is no surprise that transactions have been lower in 2023.
“The appeal of buying only started to return right at the end of the year as mortgage rates improved. There is a time lag on this data, and these figures may not reflect the volume of Product Transfers that have been reserved behind the scenes.
“The start to 2024 has certainly been more positive, applications have been more in favour of purchases than remortgages, and the mood is more robust, too.”
Imran Hussain, director at Harmony Financial Services:
“This should come as no surprise to anyone. Following ‘Trussonomics’, the shit really hit the fan and rates went up like a rocket.
“Confidence was knocked and it simply meant 2023 was a muted year for residential property transactions.
“Right now, though, the market is picking up slowly and confidence is returning as interest rates seem to be stabilising.”
Jonathan Gordon, director of wealth management at IP Global:
“You have to take into account the time lag in this data and that it reflects a time when confidence in bricks and mortar was not great.
“However, January already shows signs of a market-wide pick-up with a 0.7% rise in UK house prices and a lot more demand.
“Although a dramatic resurgence this year seems unlikely, the overall outlook is improving.
“The latest RICS survey reveals both stable buyer enquiries and early indications of increased property listings.”
Michelle Lawson, director at Lawson Financial:
“These figures were always on the cards given the higher interest rate environment we’re now in and also the higher Stamp Duty for buy-to-let investors.
“A Stamp Duty give-away should be a serious consideration for the March Budget to get the property market back up and running.
“The property industry supports so many other businesses that the knock-on effect is truly being felt.
“Transaction numbers are getting better but a real Budget boost could be a win for the economy.”
Peter Stamford, mortgage expert at The Mortgage Uni:
“Residential transactions have experienced another decline, marking the fourth consecutive month of this trend. 2023 was the year of uncertainty and that’s reflected in this data.
“Tomorrow, the Bank of England will announce its base rate decision, which is widely anticipated to remain at 5.25%. When a rate cut does come, that could trigger greater transactions volumes.”
Richard Jennings CeMAP, founder and managing director at Richard Jennings Mortgage Services:
“Whilst a 1% drop in transaction levels for seasonally adjusted transactions is nothing to cause any major concerns, a drop of 18% compared to December 2022 definitely shows the weakness of sentiment surrounding property in 2023.
“To lose almost a fifth of housing transactions is a clear indicator that people are still cautious of moving, either to commit to a first home or second steppers moving into a larger family home.
“This is understandable given the strains on finances from all other aspects of living, poor wage growth and increased interest rates.
“We keep seeing indicators that the economy is struggling in all aspects but as yet we are to see a clear plan from the Government to increase consumer confidence, provide a plan to ease the financial burden on consumers and deliver real growth to the UK housing market.”
Ken James, director at Contractor Mortgage Services:
“You mean to say that with high interest rates and clients concern about the cost of lending the figures are down on previous years .. shocker.
“2024 however has seen the resurgence of interest, I feel that if the Bank of England hold and inflation figures do not sky rocket this year should see a swell of interest and we should have a more productive year ahead.”
Amit Patel, adviser at Trinity Finance:
“What happens now and over the course of the year will be interesting. Will the Bank of England hold rates tomorrow? I think we can safely say yes.
“Will Jeremy Hunt announce a wave of tax giveaways to entice the electorate to vote for the Conservatives at the next general election? Most likely.
“There is plenty to look forward to in the property market in 2024 contrary to what many people are led to believe. All the doom and gloom of the past 18 months is now behind us.”
Maria Harris, chair of the Open Property Data Association:
“The news that residential transactions have fallen yet again no doubt reflects what was happening when those mortgages were approved last year.
“In contrast, the latest Money and Credit statistics from the Bank of England show that net mortgage approvals have risen, the third consecutive monthly increase.
“Add into the mix tumbling mortgage interest rates and the market is starting to look rosier.
“However, many mortgage holders are still rolling off historically low rates and there is continued pressure on employment and household spending.
“Housing transaction volumes rely heavily on consumer confidence so challenges to affordability mean further bumps in home moving activity levels.
“Having accurate and trustable data about our property has never been more important to restore confidence and create certainty on transactions.”
Mark Tosetti, group partnerships director at Movera:
“These figures are a little disappointing, showing as they do a fourth consecutive month-on-month fall in transactions.
“However, as transactions are at the end of the homebuying process, they do not necessarily reflect the rest of the market.
“There are reasons for cautious optimism here, with lenders dropping interest rates nearly every day and inflation looking as if it will steady.
“But we must still bear in mind the cost-of-living crisis and the many homeowners still on fixed-rate loans that are expected to end this year.
“We’ll be watching the Monetary Policy Committee’s announcement with keen interest tomorrow.”
