There were some 108,960 residential property transactions in December 2022, 1% lower than December 2021 and 3% lower than November 2022, HMRC figures show.
Non-residential transactions saw a greater yearly decline in December with a total of 10,810 sales, 5% lower than December 2021 but some 9% higher than November 2022
Emma Cox, MD of real estate at Shawbrook, said: “It was a silent night for property transactions in December, as homebuyers put off purchasing activity during the festive period. While December often sees a slowdown, with prices predicted to continue to fall in the first half of the year many in the market will be hoping the new year brings with it a renewed burst of activity as buyers look to secure deals.
“Mortgage rates, while still higher than this time last year, are beginning to come down, giving the market a renewed sense of optimism for the year to come.
“Competition will likely remain fierce among investors, many of whom will be looking to add to their portfolios this year, and buyers will need to keep their wits about them when signs of price growth return to the market.”
Kay Westgarth, head of sales at Standard Life Home Finance, added: “As we step into the new year, today’s data from HMRC is an opportunity to reflect on a healthy, albeit sometimes challenging, year for the UK property market. Despite turbulent conditions, the market remains robust and has kept a level heading overall.
“While activity did slow in December, it has traditionally been a sluggish month for the housing market due to the Christmas period. That said, following the mini-Budget, homeowners are cautious as the cost-of-living crisis continues to dominate headlines amid concerns about a house price correction.
“While the signs are largely positive for the months ahead, the industry is adjusting to a higher interest rate environment which will impact individual borrowers differently. Older borrowers who are currently on their lenders SVR due to affordability issues are likely to be feeling the pinch and they need to speak to an adviser who can discuss all the financial options available.
“Only by considering all the available options will advisers’ clients be able to find the right one for their individual circumstances, both now and in the future.”
Further reaction
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Transaction numbers dipped but only slightly as buyers and sellers were spurred on by the approaching year end.
“Even though the Bank of England is expected to raise rates again next week, fixed-rate mortgages continue to move gently downwards, with five-year fixes now available for a little more than 4%, a more palatable level for many borrowers. As the cost of funds falls, servicing pressure subsides and lenders attempt to originate new business we expect this trend to continue.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Transactions tend to be a better indication of market strength than more volatile prices. However, the small changes in today’s numbers show only part of the story unfolding after the mini-Budget slammed the door on a significant proportion of ongoing activity.
“Since then uncertainty has reigned since interest rates shot up. Business has only recently begun to return since some of those rises have been reversed but lack of supply continues to hold back buyers.”
Conor Murphy, CEO and founder, Smartr365:
“Rates continued to fall in December and into the new year after having peaked in November. We are now back in a competitive and well-priced market, which should help stoke demand.
“Product withdrawals have also thankfully settled and there are more lenders in the market now than at this time last year, encouraging greater competition on pricing and innovation of products and policy. Lenders also remain keen to add to their loan books, rounding off a range of reasons to be optimistic for the year ahead.
“As we edge closer to the annual spring bounce, lenders should look to invest in their back-end processes to make the most of the busier period. Consumers expect a seamless, digital homebuying journey, and the onus is on us to provide it.”
John Phillips, national operations director at Just Mortgages:
“These transaction figures show us that the end of 2022 wasn’t the housing market Armageddon that most commentators would have had us believe. Even in the midst of rising mortgage rates and increasing pressure on household budgets borrowers wanted to borrow and lenders wanted to lend and let’s remember that average UK house prices increased by 12.6% over the year to October 2022.
“Of course, affordability will continue to be a driving force in mortgage approvals but with five-year fixed rate products still under 5% there is still the opportunity for borrowers to get affordable peace of mind.
“There will be a significant number of borrowers coming off low fixed rates this year and there is no doubt there will be the much-vaulted payment shock but now is the time to shine for mortgage brokers who should be proactive in contacting existing clients and managing their expectations.
“Brokers can also use the negative headlines that blight the housing market by being proactive via social media and other advertising to reassure borrowers that professional advice is available and accessible.”
Tomer Aboody, director of property lender MT Finance:
“With transactions proving to be relatively consistent over the past year, it is an encouraging indication as to the state of the British property market with buyers still pushing transactions and sales.
“Whereas pricing might be slightly down and completion times are taking slightly longer, many buyers are still looking to proceed with their purchase in order to take advantage of pre-agreed mortgages with lower rates, secured earlier on in the year.
“How transaction levels will look in a couple of months’ time could be very different, however, due to higher mortgage rates and fewer buyers prepared to pull the trigger.”
Karen Noye, mortgage expert at Quilter:
“The pressures of the cost-of-living crisis appear to be taking a real toll on the housing market, as the number of monthly property transactions has started to tail off. The provisional seasonally adjusted estimate of UK residential transactions in December 2022 is 101,920, 1% higher than December 2021, and 3% lower than November 2022.
“Property transactions have been slowing for some time, and the latest data show the start of the long-anticipated fall. House prices have seen a slight dip in the last couple of months, and they are expected to fall further throughout 2023. This fall in property transactions goes hand in hand with this expectation, as a reduction in demand will ultimately result in reduced prices.
“Mortgage rates rose very quickly towards the end of last year during the aftermath of the mini-Budget, which put a hold on many people’s plans to buy their first home or to move home as monthly costs became that much more unaffordable. While mortgage rates have since lowered slightly, they remain far higher than the sub 2% rates so many had become accustomed to in recent years and will still be unaffordable for many, which will only further reduce demand.
“The pace of property transactions is a key indicator of the health of the property market, and today’s results show just the beginning of what is likely to be a very tricky period.”
Adam Oldfield, chief revenue officer at Phoebus Software:
“Although no-one will be surprised by the dip in residential transactions in December, that dip is really quite small and the current number is still above pre-pandemic levels. This is an encouraging sign that, despite the knock in confidence in September, the housing market continues to move along. Although at a slower pace.
“As predictions abound for 2023, and with conflicting reports regarding the number of buyers registering interest this month, it is perhaps inevitable that some of those predictions err on the negative side. Nonetheless, there are signs that confidence is returning and, while fuel prices continue to fall and inflation steadies, might we see a traditional post-Christmas pick up in transactions in the first quarter?”
Clare Beardmore, director, Legal & General Mortgage Club:
“We may have to wait a little longer to see the full impact of last year’s market volatility, and the subsequent slowdown in mortgage applications late last year, trickle through to the property completion data. Despite this, today’s figures show transaction levels are still healthy, though they are below some of the very high levels we’ve seen in the last 12 months.
“Our market is not without its challenges, however, there are plenty of reasons to be positive for the year ahead. Average mortgage rates have begun to fall again and lenders are keen to add to their loan books in a competitive lending market, which is all good news for consumers and represents a big opportunity for advisers to show their value. Beyond new transactions, 2023 is also predicted to be a big year for remortgage activity, which should keep the mortgage market busy. With uncertainty and economic worries dominating the headlines, first-time buyers and homeowners can both benefit greatly from the experience, reassurance, and knowledge that advisers have to offer.”
Simon Webb, managing director of capital markets and finance at LiveMore:
“Housing transactions dipped in December from the previous month but 2022 saw a relatively strong housing market with an estimated 1,258,090 homes being bought.
“The December housing transactions will be completions from buyers putting offers in at least three months ago, in most cases, before the mini-Budget last September caused some panic in the housing and mortgage markets.
“But transactions are now starting to slow and I expect for the early months of 2023 numbers will be lower as people were putting buying and selling plans on hold in the last quarter of 2022. A combination of potential recession, high inflation and cost of living plus higher mortgage rates, although they have been coming down, brings uncertainty into people’s minds.”
