Residential sales recover with 26% rise in March transactions: HMRC

HMRC data shows that the number of UK residential transactions totalled 94,870 in March 2023, 14% lower than March 2022 but 26% higher than in February.

On a seasonally adjusted basis, transactions were 19% lower than March 2022 and 1% higher than February 2023.

John Phillips, national operations director at Just Mortgages, said: “The drop in transactions from March last year was no surprise after ten consecutive interest rate rises but house prices continue to rise year-on-year and transactions increased by an encouraging 26% from the previous month. This is great news for borrowers who have been tightening their belts to maintain mortgage payments.

“The Consumer Prices Index including owner occupiers’ housing costs (CPIH) fell below 9% last month which bodes well for a cessation in future interest rate rises and we are seeing lenders dropping mortgage rates which will help generate new lending and offer a lifeline to those balancing a household budget.

“One of the concerns of 2023 was for the payment shock for borrowers coming off fixed rates but with competitive deals being launched daily, feedback from our brokers across the country suggests that this will be manageable for most households. Although the cost of living has risen sharply over recent years, we’re finding that people’s faith in the housing market remains high and new mortgage enquiries are strong across the country.”

Jeremy Leaf, north London estate agent and former RICS residential chairman, commented: "Although, of course, reflecting buying decisions made up to several months previously, transactions are always a better indicator of market health than more volatile house prices.

"Today’s numbers confirm what we’ve been seeing on the ground for the past few months – buyers and sellers are emerging from a period of uncertainty and responding to increased supply of properties, as well as more stable interest rates. As a result, property market activity is proving to be much more resilient than we had feared, certainly at the end of last year.

"However, inflation and falling real incomes remain a concern, which is resulting in more hard bargaining and protracted sales."

Adam Oldfield, chief revenue officer at Phoebus Software, added: “Although we were still feeling the fallout from the mini-budget across the housing market months down the line it appears, from the non-seasonally adjusted transaction figures which have been in the pipeline for upwards of three months, that things weren’t as bad as everyone thought. Thankfully, even though there are still obvious concerns while inflation remains in double digits, confidence appears to be increasing. Of course, the current increase in activity won’t be seen in the HMRC figures for another couple of months.

“The key for lenders, and brokers, will be to keep the hopper full and that means looking at future lending holistically. There is a huge number of people on fixed rate deals that are coming to an end this year. House purchases may well be increasing at the moment, but that is only half the story and helping borrowers coming off fixed rates presents a huge opportunity that needs to be managed well.”