HM Revenue and Customs (HMRC) released its property transaction figures for November 2024 last week showing a mixed performance across the residential and non-residential sectors.
In the residential market, HMRC’s provisional seasonally adjusted estimate records 92,640 transactions.
This represents a 13% increase compared to November 2023 but an 8% decline from October 2024.
The non-seasonally adjusted estimate for residential transactions stands at 104,440, showing a significant 19% year-on-year rise but a 6% drop compared to the previous month.
SHARPER DOWNTURN
In contrast, the non-residential market faced a sharper downturn. HMRC’s provisional seasonally adjusted estimate reports 9,430 transactions, marking a 5% decrease from November 2023 and a substantial 33% decline from October 2024.
The non-seasonally adjusted estimate aligns closely, with 9,750 transactions recorded – a 5% year-on-year drop and a 35% fall from the prior month.
The figures highlight the volatility in property transactions as market dynamics continue to shift.
The residential sector shows resilience with year-on-year growth, while the non-residential sector faces ongoing challenges.
Observers will be keen to see how these trends develop in the coming months as economic conditions evolve.
MIXED REACTION
Jason Tebb, President of OnTheMarket, says: “A dip in transaction numbers in November compared with the previous month is always concerning as transactions are a better indicator of market health than house price fluctuations. However, the numbers need to be put into context as buyers and sellers brought forward transactions to October amid concerns as to what the Budget might hold, boosting activity that month.
“Two rate reductions in the second half of last year bolstered buyer and seller confidence, and with further cuts expected this year, there is cautious optimism which bodes well for the spring market. While some lenders have reduced their fixed-rate mortgages this month, helping ease affordability, increased stock means buyers have more choice so are in a stronger negotiating position and remain price sensitive.
“With stamp duty changes providing an extra motivation for first-time buyers in particular to transact over the next few months, a further rate cut from the Bank of England would be timely and give further impetus to the spring market.”
EXTRA CONFIDENCE
Nathan Emerson, Chief Executive of Propertymark, says: “With more competitive interest rates than this time last year, growing numbers of homes coming to the market, and a rush from many buyers and sellers to beat the rises to stamp duty commencing from April 2025 in England and Northern Ireland, the overall mix of market conditions has inspired many and, in numerous cases, provided the extra confidence and affordability people were waiting for to make their first or next house move.
“We anticipate a busier than normal first quarter of 2025. However, activity will likely settle back down to more expected levels, allowing people to comprehensively review the market and negotiate their next move without the pressure of a stamp duty deadline.”
ANOTHER CRACK
Tom Bill, Head of UK Residential Research at Knight Frank, says: “This is the third crack that has appeared in the UK housing market since borrowing costs jumped after the Budget.
“We saw a drop in mortgage approvals in November and the latest Halifax house price data showed a monthly drop in December.
“As higher borrowing costs start to bite harder we would expect more downwards pressure on house prices and transaction activity in 2025.”
LESS-THAN-IDEAL
Iain McKenzie, Chief Executive of The Guild of Property Professionals, says: “Many perspective buyers were waiting for mortgage rates to fall further before making their move, however, the impending Stamp Duty deadline has spurred them to act sooner.
“Historically the lead up to a stamp duty change has generally created an increase of activity, and this time is no different.
“Despite a less-than-ideal start, the housing market proved resilient and finished 2024 strongly. This year the housing market has started in a much stronger position with more choice for buyers and a strong sales pipeline.
“If the Bank of England decides to cut the rate in February, it will be a further shot in the arm for the market. Rates cuts are on the card for 2025, but how many is still up for debate.
“While some economists are expecting at least four rate cuts, the financial markets are currently pricing in just two. Interest rate cuts should have a knock-on effect on mortgage rates, improving affordability and stimulating market activity.”
VALUABLE INSIGHT
Amy Reynolds, Head of Sales at Richmond estate agency Antony Roberts, says: “These figures offer valuable insight into overall activity and are a key indicator as to how the market is likely to shape up in early 2025.
“A dip in transaction volumes shows that higher borrowing costs and affordability pressures are inevitably impacting buyer activity. That said, this month we have been seeing a good number of market appraisals, which is often a precursor to a strong Spring market.
“In areas where stock is limited, markets have remained steady, particularly the family home market with work-from-home potential.
“Homes that are well priced and well presented are still selling relatively quickly; while buyers may pause to assess financial implications, high-demand areas are likely to retain interest.”
POLITICAL HEADWINDS
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, says: “As HMRC records not just mortgaged but cash transactions too, these figures provide a much better indicator of market health than more volatile house prices.
“However, the length of time required to conclude a sale shows activity responded quite significantly to the Chancellor’s October Budget.
“Looking forward, the economic and political headwinds which have become more apparent since then mean we expect to see a softening in transaction numbers over coming months, particularly as first-time buyers find it increasingly difficult to take advantage of fast-disappearing stamp duty concessions.”
SENSITIVE PRICING
Mark Harris, Chief Executive of mortgage broker SPF Private Clients, says: “Swap rates have been mostly trending upwards since mid-December as the outlook suggests fewer rate cuts this year than previously thought.
“Despite this, a number of lenders including Halifax, HSBC and Leeds Building Society have made significant reductions to their fixed rates as they attempt to build a pipeline of business for the new year.
“However, other lenders have moved in the opposite direction and have raised some rates, including Skipton, Virgin and Clydesdale, while TSB has increased the pricing of more products than it has reduced, and Accord has increased as many rates as it has cut.
“Lenders who are increasing their pricing may be more sensitive to Swap rate rises than bigger lenders who have more funds in savings to call upon and are better able to absorb any increases in Swaps.”
GROWING CONFIDENCE
Tomer Aboody, Director of specialist lender MT Finance, says: “A quite significant increase in transaction numbers compared with this time last year shows how reduced interest rates have encouraged buyers and sellers to be active.
“Although we are still some way off the highs of previous years, the growing confidence in the market is promising.
“The full impact of the Budget has yet to be factored in, and therefore, a true indication of where we are at would be around the spring, once the stamp duty holiday comes to an end.
“Let’s hope a further cut in interest rates comes before then, helping the market stay productive and confident.”
