Recent data shows that the UK’s residential property market has started to bounce back. In February, residential property transactions began to increase with commentators saying there are ‘plenty of reasons to be positive’ going into Quarter 2.
According to HM Revenue and Customs (HMRC), the provisional estimate of the number of UK residential transactions in February 2023 is 76,920.
Although this figure has declined by 18% since this time last year, it is 2% higher than it was at the start of the year when the figure dropped by 7%.
Overall, residential conveyancing transactions are lower than they were before the pandemic.
Danny Belton, Head of Lender Relationships, 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 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.”
Belton also pointed out that any decline in activity will be likely to return the property market to be the same as it was before the pandemic as opposed to the “supersonic” levels we have experienced following the stamp duty holiday which started in 2020.
Andy Sommerville, Director at Search Acumen said: “Today’s data shows how we are continuing to see the impact of a challenging economic environment on residential transaction volumes. Whether through buyers pulling out of deals, or current lending markets dulling consumer appetite, it’s clear the transaction highs of the past two years are long behind us,”
Sommersville continued saying he was more optimistic for the future:
“Macro-economic conditions are more promising however, as if the Chancellor is correct, we have not only narrowly missed a recession, but have significant growth ahead.”
Although transactions have dropped compared to levels before the pandemic, they are similar to the levels seen between 2017 and 2019 which is promising.
Head of Suffolk Conveyancing, Stuart Milbourne remarked: “2023 has seen slightly reduced prices, and slightly reduced mortgage rates than that of the “Truss economics era” of late 2022 (you can now obtain a 5-year fix at 3.75%) making moving more realistic for a larger proportion of the population. All of this should lend itself to a more stable housing market throughout the summer which everyone will welcome.”
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