The latest monthly figures from HMRC show that, on a seasonally adjusted basis, the number of UK residential transactions in February 2024 was 82,940, 1% higher than in January 2024 but still 6% lower than in February 2023.
Small month-on-month changes carry little significance but do contribute to the longer-term trend and the latest uptick in activity resulted was widely welcomed by those in the property industry.
Market comment
Jason Tebb, president at OnTheMarket, said: “The increase in transactions has been fuelled by the rise in confidence among buyers and sellers since the beginning of the year. Expectations are growing that interest rates have peaked and the next move in rates will be downwards.
“Lower inflation figures, combined with encouraging comments from the Bank of England suggest rate reductions may come as early as the summer, enabling buyers to proceed with more optimism with regard to the prospects for mortgage rates.
“With Easter early this year, agents are anticipating increased activity over the next few weeks as the weather improves and properties appear at their best. Sellers who price sensitively to reflect buyers’ continued affordability concerns are most likely to contribute to improving transaction data.”
Terry Woodley, MD of development finance at Shawbrook, commented: “A further rise, albeit small, in property transactions will be welcome news for developers. Another month-on-month increase reflects heightened confidence in the market, and declining inflation coupled with the general expectation of interest rate cuts later on in the year will provide further optimism for developers looking to take on more projects. Many will also be keeping an eye on the outcome of the Government’s brownfield consultation which could help to streamline planning processes
“This will also help the rental market which continues to be starved of stock in the face of soaring demand. Many developers have had to alter their strategies to deal with market uncertainty and rising costs, but the prospect of reduced planning barriers and lower mortgage rates may encourage developers to shift more in favour of residential developments.”
Frances McDonald, director of research at Savills, added: “Buyers are heading back to the market, thanks to an improved outlook which has boosted confidence. Completed housing transactions picked up (+1%) for the second consecutive month in February, even on a seasonally adjusted basis. But this data lags more recent housing market indicators.
“More up to date figures from TwentyCi show that greater confidence in the mortgage markets has fed into higher levels of activity so far this year. Agreed sales net of fall throughs in Q1 were 20% up compared to 2023 and remain 7% higher than pre-pandemic levels. The £300,000 to £500,000 price band saw the biggest uptick in activity (+25% vs last year) as more mortgage-dependent buyers have seen an improvement in costs.
“This also tallies with our March buyer and seller survey, which showed a further pick up in prospective buyers’ commitment to move, particularly amongst those reliant on debt. It also showed early signs that buyers’ budgets are beginning to rise, especially those looking to upsize and take on more mortgage finance.”
Nathan Emerson, CEO at Propertymark, says: “Spring and summer are traditionally the strongest times for people to sell their homes, so we are likely to see a further uptake, making it easier to complete a transaction over the coming months. Propertymark’s own Housing Insight Report more recently showed a 129% increase in the number of market appraisals undertaken, showing the growing desire from buyers and sellers to get moving once again.”
Matt Thompson, head of sales at Chestertons, stated: “Although some buyers waited for the Spring Budget, in the hope of a change to Stamp Duty, London’s property market remained busy throughout February. Many people believe that mortgage rates may be increasing over the coming months and feel the need to act now while rates are slightly more affordable. The steady growth that property values have seen since the beginning of the year is yet another trigger for house hunters wanting to finalise their search sooner rather than later.”
Lastly, Nicky Stevenson, MD at Fine & Country, commented: “Mortgage affordability is still holding back property transactions compared to last year, but there is reason for cautious optimism about activity levels rebounding soon, as the biggest lenders continue to slash their rates.
“Demand has already picked up nicely this spring, with buyers who have been delaying a move resuming their searches as consumer confidence builds. A drop in the Bank of England’s base rate is hopefully around the corner, and that will give the property market a further boost.
“With demand building, this is a good time of year for sellers to begin marketing their property. Pricing sensibly remains important, particularly for those who are pinning hopes on moving quickly.”
