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HMRC monthly property transactions data

ended 21. March 2023

At 09:30 this morning, HMRC is publishing the official property transactions data (commercial and resi) for February 2023. Residential property transactions are likely to be down again (potentially sharply) as the fall-out from the mini-Budget is reflected in the data five months on from the fiscal farce. Few Qs:

  • Exactly how hard have the mini-Budget and broader cost of living crisis hit transaction levels (residential and/or commercial) in recent months?
  • What are the main reasons transaction levels have fallen, e.g. higher mortgage rates, reduced affordability, inflation and general uncertainty surrounding the jobs market and economy?
  • With the chances of Threadneedle Street staying rates this week following SVB and Credit Suisse, could this trigger more activity and transactions in the months ahead? Could Bank Rate have peaked?

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6 responses from the Newspage community

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Gary Bush
Financial Adviser at MortgageShop.com
Transaction levels have slowed sharply as a result of the mini-Budget debacle. It piled even more fear onto consumers already being hit hard by the cost of living crisis. To add to the problems this caused, sadly the banks overreacted as a response on the whole by ceasing to lend and creating rate chaos by overpitching the future rate drastically. UK banks shouldn't be seen by the general public making such knee-jerk and panicked measures and it ruined what little consumer confidence was left. Personally speaking, relating to the global bank failures, I feel that the Bank of England should still increase the base rate and not take its eye off the ball, namely the high inflation rate.
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Graham Cox
Director at Bridging Hub
The mini-Budget caused a catastrophic fall in consumer confidence, which the mortgage market is only slowly recovering from. However, mortgage rates are no higher now than they would have been without the Truss fiasco. Ten consecutive base rate rises are the primary driver of the market slowdown, though it's possible we've seen the last hike after the events with Credit Suisse and Silicon Valley Bank. So-called affordability, or more accurately, buyers' ability to borrow enough to pay the overinflated prices properties are on the market for, has been severely hit. Lower house prices are what's required to make property truly affordable again. If mortgage rates remain at current levels, that's virtually guaranteed. The only question is how far they fall.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
Don't read too much into completions stats given that it takes around 5-6 months for most purchases to complete after being agreed. The snapshot of the market in the latter part of last year simply doesn't match up the good levels of activity that we are seeing on the ground in 2023.
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Paul Currie
Partner- Dispute Resolution at DFA Law LLP
As a firm of solicitors offering residential Conveyancing to clients we have seen a steady return to 2022 levels following a gradual decline through to December, our lowest level of new instructions for some time.

Last years’ mini budget undoubtedly spooked the city and lenders alike but with the big banks releasing much more favourable products in Q1, there appears to be some 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 are not as available as they were in the recent past.
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Amit Patel
Adviser at Trinity Finance
After successive years of cheap borrowing, 2022 saw an upward trajectory of base rate rises with a steep jump in inflation due to the energy crisis. The mini-Budget added more fuel to the fire, the markets reacted and all hell broke loose as lenders increased their rates and tightened affordability. People tend to be more cautious when there is uncertainty about job security and the wider economy, the only way to reverse the trend would be to keep base rates on hold or even a reduction by 0.25%. The housing market cooled somewhat but transaction levels will return to normal levels very shortly.
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Luke Thompson
Director at PAB Wealth Management
The increases in interest rates have affected the property market massively in recent months. Since January, rates have eased slightly and this has made things slightly more competitive but I think buyers are having to get used to the fact that the age of ultra-low interest rates is almost certainly behind us. The biggest reason for the fall in transactions is increased costs. In October and November, we had purchasers pulling out of deals on a daily basis. This has abated somewhat as buyers have become used to higher interest rates but it has meant that sellers aren't achieving the higher sale prices they would have been hoping for in mid-2022.