Property transactions down by nearly a fifth year-on-year: HMRC

Residential property transactions totalled 76,920 in February - 18% lower than February 2022 but 2% higher than January, according to the latest figures from HMRC.

On a seasonally adjusted basis, HMRC's statistics show that transactions remain 4% lower than January 2023.

Danny Belton, head of lender relationships at Legal & General Mortgage Club, commented: “Despite a slowdown in transactions completed in February, there are still plenty of reasons to be positive about the market as we head into Q2. According to the latest data from Moneyfacts, product choice recently passed 4,000 for the first time since August 2022, while the average product shelf life has rocketed to 28 days (up from just 15 a month ago), all of which makes life easier for brokers and borrowers. Additionally, the average two- and five-year fixed rates fell month-on-month for the third month running, supporting both purchase and remortgage activity. These are all positive and recent developments which have not had an opportunity to impact transactions yet.

“It is also important to recognise that we have become accustomed to supersonic levels of activity triggered by the Stamp Duty tax break. Any dip in activity over the next few months will likely return us to average pre-pandemic levels, and not anything sinister. Nonetheless, with various moving parts, it is important that anyone concerned about the changing market consults a professional mortgage adviser, who will be able to explain the impact (if any) on their situation.”

Mike Scott, chief analyst at national estate agency Yopa, said: "New figures from HMRC for the number of homes sold in February confirm that the housing market slowed down after last September’s mini-Budget and the interest rate rises that followed it. The number of sales was 4% lower than last month, and 18% behind last February’s very active market. It was 6.2% lower than February 2019, which was a more normal market, before the pandemic.

"However, the sales that completed in February will largely have been agreed last autumn, in the immediate aftermath of the interest rises. We are now seeing signs that activity is picking up again, and we expect the number of sales to return to more normal levels later in the year, though not to return to the very high level of activity that we saw between mid 2020 and mid 2022. House prices should respond similarly, so we also expect them to return to modest growth in the second half of the year."

Paul Currie, partner at Northampton-based DFA Law, added: “Though these figures show transaction levels are down nearly a fifth compared to a year ago, as a firm of solicitors offering residential conveyancing to clients, we have seen a steady return to 2022 levels of activity following a decline after the mini-Budget through to December, our lowest level of new instructions for some time. Last year's mini-Budget undoubtedly spooked the city and lenders alike but with the big banks releasing much more favourable products in the first quarter of 2023 so far, there appears to be some demand stimulus again. On the flip side, commercial property transactions do appear to have stalled, which is likely down to issues with labour, cost of materials and delays with planning applications. In addition, funding for commercial projects is not as available as it was in the recent past.”