Property Transactions Continue to Drop at the End of the Year

The latest Property Transactions Count report from HM Revenue & Customs (HMRC) shows that home sales continued to drop at the end of last year, as per tradition in the housing market.

The provisional seasonally adjusted UK property transactions count for December 2018 was 102,330 residential and 11,230 non-residential sales.

This seasonally adjusted estimate of the number of residential property transactions dropped by 0.1% between November and December last year. On an annual basis, however, December’s estimate is up by 3.6%.

In December 2018, non-adjusted residential transactions were approximately 11.5% lower than in the previous month. Year-on-year, non-adjusted sales were down by 2.9%.

HMRC notes that figures for the three most recent months are provisional, and are therefore subject to revision.

Comparison of non-seasonally adjusted and seasonally adjusted data from HMRC shows that activity in the residential property market is strongest in the summer months, with a clear low point around the end of the calendar year.

Comments

Craig McKinlay, the New Business Director at Kensington Mortgages, has witnessed this trend: “It’s usual for transactions to be subdued at the end of the year, as people wind down for the festive period. However, the continued stagnation is a sign of the political instability we’re experiencing, and this stagnation is affecting buyers and homeowners on every rung of the property ladder.

“What’s needed is clarity. Only once people feel secure will buyers feel comfortable making the moves which are necessary to ease pressure on the housing market. Removing financial barriers for those looking to downsize, for example Stamp Duty, would be a sensible move in freeing up larger properties for those looking to move up the ladder.”

Neil Knight, the Business Development Director for Spicerhaart Part Exchange & Assisted Move, tries to make sense of the data: “The latest property transaction figures show quite a confused picture – the seasonally adjusted figures show a very slight decrease from November to December (0.1%), but a 3.6% increase on last year, while the non-seasonally adjusted figures show transactions were down significantly – 11.5% on the previous month and 2.9% lower than last year. But these are provisional, so it would be unwise to make any hard and fast analysis of them at this time.

“Especially as our estate agency divisions have had a very positive start to the year, which suggests that the demand is out there and, whilst Brexit uncertainty is definitely having an impact, it’s not holding everyone back.

“And, when you bring new housing into the picture, it is clear that activity is very much on the up. In fact, construction output hit an all-time high in November 2018. All new construction work was up 3.4%, with new housing up 4.9% and total output exceeding £14 billion for the first time since records began in 2010. This suggests that, while Brexit uncertainly may be having an effect on transactions in terms of those who maybe want to move but don’t need to, new housing is still very much needed for those who have to move or are looking to make their first step onto the housing ladder.”

Shaun Church, the Director of mortgage broker Private Finance, also comments: “The property market has reached a stalemate, as Brexit uncertainty causes homebuyers and sellers to put their property plans on hold. Both sides are waiting to see what the near future holds for the UK property market, before they make their next move.

“While 2018 saw the market flatten, 2019 should see small pockets of growth. Activity at the lower end of the market, particularly among first time buyers, is likely to account for a large chunk of market activity. These buyers are unencumbered by the need to sell an existing property, and empowered by easing house price growth and Stamp Duty exemptions.

“In recognition of the flurry of activity occurring at the lower end of the market, lenders are offering competitive rates, alongside relaxed lending criteria to attract first time buyer business. As a result, market competition is bringing a further boost to first time buyers, making owning a property more affordable once the initial hurdle of saving up a deposit has been passed.”