Residential transactions up 12% in November: HMRC

UK residential transactions totalled 114,200 in November, 12% higher than November 2021 and 4% higher than October 2022, according to the latest figures from HMRC.

On a seasonally adjusted basis, transactions were 13% higher than November 2021 and less than 1% higher than October 2022.

Mark Harris, chief executive of mortgage broker SPF Private Clients, commented: "Transaction numbers are holding up, particularly as we would expect things to start to slow down as we approach Christmas. Buyers with good mortgage offers are keen to complete before they expire, while others have to move for whatever reason, even if the market is more difficult than it has been.

"Even though the Bank of England hiked the base rate by half a point as expected last week, fixed-rate mortgages continue to move gently downwards, with five-year fixes breaching the 4.5% barrier and expected to go below 4 per cent in the new year as the cost of funds falls, servicing pressure subsides and lenders attempt to originate new business.

"For some borrowers, a base-rate tracker with no early repayment charges is a better alternative until fixed-rate pricing comes down further."

Jeremy Leaf, north London estate agent and former RICS residential chairman, said: "As usual, it is transactions which are the better measure of market health than more volatile property prices. In fact, prices have held up better than we might have feared given recent cost-of-living and mortgage rate uncertainty. Although these transaction figures are a little dated, reflecting what happened a few months ago, activity is clearly recovering from the shock of the mini-Budget a few months ago now that rates have begun to settle.

"Many buyers will be contemplating their next moves over the festive break and recent pick-up in enquires will mean that figures will probably continue on a better-than-expected course into the new year."

Charlotte Nixon, mortgage expert at Quilter, added: “The cost-of-living crisis is still yet to take a real toll on the property market, as the number of monthly property transactions has not yet started to tail off as had been expected. The provisional seasonally adjusted estimate of UK residential transactions in November 2022 is 107,190, 13% higher than November 2021, though less than 1% higher than October 2022.

“While property transactions are yet to fall, they are certainly beginning to slow. A fall in house prices is widely anticipated for next year – Nationwide just yesterday shared its prediction that house prices could lower by 5% in 2023 – and slowing property transactions is likely the first sign that this could materialise as reduced demand goes hand in hand with reduced prices.

“The Bank of England has now hiked its Base Rate to 3.5%, which will have a knock-on effect on mortgage rates – primarily for those on variable rate mortgages. As such, more people may opt to hold off on purchasing a home as the monthly costs rise and become that much more unaffordable, which will only further reduce demand.

“The government has now announced that its 95% mortgage guarantee scheme will be extended by a year, which should help first-time buyers purchase their first home amid a very trying time. This extension, coupled with the changes made to Stamp Duty at the mini-budget in September, could keep property transactions at a higher level than they might otherwise have been. However, given the high level of mortgage rates and soaring everyday costs, we are still likely to see a dip as we head into 2023.”