Homeowners Choosing to Improve, Not Move, Latest Figures Suggest

The latest property transaction figures from HM Revenue & Customs (HMRC) suggest that homeowners are choosing to improve, not move, due to the high cost of buying a new home.

The provisional seasonally adjusted property transaction count for January 2018 was 102,610 residential and 10,780 non-residential sales.

The seasonally adjusted estimate of the number of residential property transactions rose by 1.3% between December 2017 and January 2018. January’s seasonally adjusted figure is 0.1% lower than January 2017’s.

For January this year, the number of non-adjusted residential sales was around 23.3% lower compared to December. This is 2.6% higher than in January last year.

Homeowners Choosing to Improve, Not Move, Latest Figures Suggest

Shaun Church, the Director of mortgage broker Private Finance, comments on the data: “The New Year hasn’t rung in any big changes for the property market, with transaction levels remaining unchanged compared to this time last year and rising only marginally on the previous month. Seasonal factors are at play here, with the market traditionally taking a while to warm up before activity ramps up in the spring. However, the plateau in transactions is also in line with the more sedate pace of activity that became commonplace last year.

“Given the current political and economic uncertainty, the fact the market is holding steady should be appreciated rather than taken for granted. There are positive signs of life in the first time buyer market, with the number of new buyers taking out a mortgage in 2017 hitting an 11-year high. The removal of Stamp Duty and growing number of competitive mortgage deals aimed specifically at this market indicates first time buyer transactions should experience some growth in 2018.

“Other areas of the market, such as the buy-to-let sector, are struggling to play catch-up, with tax and regulatory changes still having an impact. While new buyers are now benefitting from lower house purchase costs, those further up the property ladder have been left out in the cold. The high cost of moving means many existing homeowners will choose to improve, not move, resulting in sluggish activity further up the property chain.”

The Sales and Marketing Director at OneSavings Bank, John Eastgate, also reacts: “Transactions levels reflect the ongoing challenges of mortgage affordability. Whilst there have been any number of demand side initiatives, such as Help to Buy and the recent Stamp Duty Land Tax changes for first time buyers, these are piecemeal approaches to housing policy at a time when it needs to be more holistic.

“Recent figures from the Institute of Fiscal Studies highlighted the scale of the collapse of homeownership among 25-34-year-olds, where homeownership fell from 65% in 1995/6 to 27% 20 years on. We need to reflect on the complexities that have created this situation, rather than looking for a miraculous silver bullet.”

And Nick Chadbourne, the Chief Executive of conveyancer outsourcer LMS, offers his thoughts: “January saw steady improvement in the housing market, according to HMRC’s latest figures. Record numbers of first time buyers are helping to drive activity, and 2017 saw the highest number of first time buyers in more than a decade, which is reflected in our own conveyancing volumes.

“Help to Buy, affable interest rates and the Chancellor’s recent easing of Stamp Duty have all helped first time buyers make their first step on the property ladder. However, with asking prices rising by an average of £2,400 in January alone, and suggestions that the Bank of England will look to increase base rates at least once in 2018, there is no room for complacency, and more can still be done to keep prices competitive and maintain demand.

“The talk of further rises in the base rate should continue to stimulate demand in the remortgage market, as borrowers look to fix and protect themselves against future increases.”