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Property transactions drop by a third in the year to September

Written by: Shekina Tuahene
Residential property transactions plummeted 37% year-on-year in September to 103,930, official statistics reveal.

This was due to “forestalling activity” last year when buyers rushed to complete transactions before the final phase of the stamp duty holiday ended on 30 September 2021, according to HMRC.

Compared to 2019 when market conditions were “more normal” with 99,570 transactions were completed, activity for this year was 3.9% higher on a seasonally adjusted basis. 

Conor Murphy, CEO and founder of Smartr365, said: “Today’s data reinforces why the property market is famed for its resilience. Despite a busy and complicated period for the mortgage market and economy, activity remains reassuringly consistent.  

“The recent stamp duty tax cuts will also certainly help to spur activity despite economic strains elsewhere.” 

‘Uglier’ outlook 

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, added: “Sales completing in September were largely agreed around June, when demand had started to drop back a little, as rising prices persuaded some to rethink.  

“However, while mortgage rates were rising, the average two-year fixed rate was 3.61% (according to Moneyfacts), so for an awful lot of buyers, monthly payments still felt within the realms of affordability.” 

Coles said higher average mortgage rates of above 6% would hit completion figures towards the end of the year. 

She added: “Sales agreed in the coming weeks are likely to look far uglier, as the chaos unleashed by the mini Budget pushed mortgages well out of reach for an awful lot of buyers.” 

Strong and steady demand 

Although HMRC noted that recent rises in mortgage rates were unlikely to have an impact on September’s figures due to the time it takes to complete, transaction activity was flat compared to August with a 0% change. 

Mark Harris, chief executive of SPF Private Clients, said: “With the Monetary Policy Committee expected to announce a 100 basis points increase in interest rates next month [taking the rate to 3.25%], there is more pain to come in the short-term, which will inevitably impact transactions. 

“Those who are already mid-transaction are keen to proceed with a mortgage offer secured some time ago, which is likely to look particularly attractive now.” 

Simon Webb, managing director of capital markets and finance at LiveMore, said transactions staying level in September was a sign that the demand for home buying was “strong but steady”. 

He added: “We would expect the housing market to start cooling as mortgages rates are rising fast and the cost-of-living crisis puts a strain on people’s finances. 

“Demand however, is still there, despite house prices continuing to rise, albeit at a slower growth rate than last year when the market was fuelled by the stamp duty holiday. The recently announced stamp duty change could also prop up the market for homes worth under £500,000. The bottom line is a shortage of houses for sale and not enough new property is being built fast enough to keep up with demand.” 

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