No signs of slowing down according to HMRC

Owning a property remains a ‘safe’ option despite the current economic challenges, and the latest transaction figures in the UK property market show the dynamism of the sector.

HMRCOfficial May 2022 transactions data shows continued strength in the UK property market, with sales up 1.6% since April 2022 figures. Residential property transactions during the month totaled 100,870, which is slightly lower (2.0%) than a year ago.

This is despite the obvious political and economic headwinds, including budget cuts due to the rising cost of living and rising interest rates. According to Nick Leeming, president of Jackson-Stops, the market shows “no real signs of slowing down”.

He adds: “The momentum hasn’t run its course yet. By historical standards, borrowing remains cheap, and the current interest rate of 1.25% is still well below the historical average of 7% between 1970 and 2022.

“House prices continue to show month-over-month growth, albeit at a slower pace than the record boom of the last 6 months. As long as things are going well, people are moving.

UK property market less volatile

From the start of the pandemic – and historically – owning bricks and mortar in the UK has been a popular way of protecting assets. For foreign investors too, the UK property market is often seen as a ‘safe haven’, with limited stock and extremely high demand.

Despite a slight slowdown in the amount of transactions this year compared to last year, the appetite is certainly still there with no major setbacks on the horizon according to industry experts.

Anna Clare Harper, director of real estate technology platform IMMO, said: “Real estate transactions matter because they determine house prices, which reflect and affect both our confidence and the economy.

“Homeowners and investors feel safe owning residential property because it tends to hold its value well in times of uncertainty and risk, like we are now.”

Look at transactions, not just prices

For those looking to invest in the UK property market, thorough research is advised before committing. This could involve looking at housing price data in particular locations, as well as things like upcoming regeneration and infrastructure improvements.

Additionally, positive trade data can be a good indication of general confidence in the market.

Jeremy Leaf, North London estate agent and former residential chairman of RICS, said: “Transactions, which are probably a better measure of market health than more volatile prices, are often the last to reflect change.

“The long period between the date a sale is agreed and its conclusion means that we can wait several months before noticing that something is happening.

“Previous declines in the number of sales could have been partly blamed on the shortage of inventory, but we are now seeing, at the peak, a slowdown in demand caused mainly by higher inflation, as well as uncertainty over at its end.

“This lack of choice, combined with low unemployment and rising wages, means no major corrections are expected.”

Will affordability be a problem?

The cost of living crisis is affecting increasing numbers of people across the UK. Whether that could start to affect prices in the UK property market remains to be seen, as people’s budgets shrink, but Nick Leeming expects strong demand to keep values ​​afloat.

He added: “It would be unrealistic to anticipate that affordability factors will not impact the housing market in the months ahead.

“By the end of the year, it has been widely believed that interest rates will rise to 3% and inflation to 11%, which will see owners on the tracker and variable mortgages the hardest hit .

“Interestingly, rumors of tougher affordability tests have recently been quashed, suggesting that the government is keen to do all it can to support the growth of property transactions. real estate will remain resilient until 2023, it will probably be the credit market that will dictate the fortunes of many.

“While higher interest rates are likely to dampen housing demand, greater supply is needed to even out the scales and keep transactions buoyant. It’s not just in the form of new construction, but also by encouraging the sale of under-occupied homes by supporting downsizing and rising moving costs.