Residential property sales in the UK in December increased month on month but are still some way below where they were a year ago, the latest official data shows.
Seasonally adjusted sales increased by 0.2% between November and December 2016 but this was 8.5% lower compared than the same month in 2015, according to the figures from HMRC.
The HMRC report also points out that the large increase in transactions for March 2016 followed by the substantial reduction in April is likely to be associated with the introduction of the higher rates on additional properties in April 2016.
However, whilst April and May 2016 are lower than the corresponding months in 2015, it should be noted that the total for the first to the second quarters of 2016 was still substantially higher than the corresponding period the previous year.
It adds that non-tax factors may have played a role as well, for example the Bank of England’s plans to curb buy to let mortgages resulting in a rush to purchase before April 2016 and the European Union referendum affecting transactions in recent months.
However, according to Stephen Wasserman, managing director of West One Loans, the figures show a sustained uptick in property transactions and the fact that they are down year on year shows that the UK’s property market is demonstrating resilience in the face of economic and political uncertainty as well as Brexit and tax change.
‘In times of prolonged economic uncertainty, it’s imperative that the industry responds and makes diverse and flexible financing options available for property purchasers. This will help support chains and facilitate new deals,’ he said.
David Brown, chief executive officer of Marsh & Parsons, also believes that a lot of positives can be taken from the figures as sales have increased despite the obstacles in 2016.
‘The total number of transactions rose slightly compared to 2015, to the highest since the financial crash. The resilience demonstrated in the face of a vote to leave the EU and marked changes to stamp duty which significantly impacted sales of second homes and the buy to let market is not to be scoffed at,’ he said.
‘We’ve already witnessed an encouraging stream of interest from buyers across London during the start of 2017, particularly international buyers who have been buoyed by the falling value of the pound and continue to view London property as a solid investment,’ he pointed out.
The forthcoming months will test the strength of the housing market, according to Andy Knee, chief executive of LMS. He pointed out that record low mortgage rates will not last forever. ‘Borrowing costs will become less affordable, ultimately contributing to a slow-down in activity as buyers adjust. Indeed, LMS data reveals 32% of remortgagors expect a rate rise in 2017,’ he explained.
Last year was an unusual one for the property market, said Doug Crawford, chief executive officer of My Home Move with sales fluctuating due to stamp duty change, the referendum and the economic and political outlook. ‘Despite this, transaction levels have remained stable in the second half of the year, which is a testament to the market’s strong fundamentals. Looking ahead to 2017, buyers’ confidence is likely to grow as the economic picture becomes more stable, which will lead to an increase in activity,’ he pointed out.
‘Investors will also become used to the regulatory new normal and begin to factor policy changes into their planning, which will drive greater volumes in the buy to let market than we are currently seeing. In the long term, demand for both rented and owner occupied accommodation will support prices and sales volumes,’ he explained.
‘There will undoubtedly be challenges for the market over the next 12 months, with the triggering of Article 50 and changes to landlords’ tax relief looming on the horizon. However, the property market has shown it is more than strong enough to overcome these obstacles,’ he concluded.
The underlying issue is that there are not enough homes to meet demand, according to Ishaan Malhi, chief executive of online mortgage broker Trussle. ‘This is pushing prices up at a rate which is completely out of step with wage growth and consumer spending power, and aspiring home owners are being left behind,’ he said.
‘For the time being, mortgage rates are the cheapest they’ve been in years. While this is helping buyers, affordability can only go so far when there aren’t enough houses on the market,’ he added.
