31 May 2024
If you are covering the Bank of England’s Money and Credit statistics or HMRC’s Property Transaction statistics, please see the following comment from Karen Noye, mortgage expert at Quilter:
According to new statistics from the Bank of England, despite April usually being a relatively busy month for the property market net mortgage approvals for house purchases totalled 61,100 in April, marginally less than in March. Similarly, net approvals for remortgaging decreased to 29,900 from 33,500 over the same period. Given that mortgage rates remain volatile and the economic outlook still unpredictable it is unsurprising that people are less inclined to embark on huge life decisions like buying a house.
However, there does seem to be a silver lining for the property market and better times might be ahead. Property transaction statistics produced by HMRC tell a slightly rosier picture. The provisional seasonally adjusted estimate of the number of UK residential transactions in April 2024 is 90,430, 10% higher than April 2023 and 5% higher than March 2024. But we must remember that it is 10% higher than a very low base given that there were comparatively few transactions last year.
Although the housing market is certainly far from out of the woods, a drop in interest rates and clearer glide path for rates in the future will help buyers gain that certainty needed to make the leap and buy a new property. Despite significant affordability pressures many homeowners and buyers are coming to terms with the fact that rates are unlikely to return to the ultra-low level that we have become accustomed to before and during the pandemic. As memories fade of this time and lives can no longer be put on hold it is expected that demand will return to the market as people look for their next property.
The next government could help push this along by reforming the stamp duty landscape. This area of tax is not particularly lucrative for the government and serves to glue up the market with older homeowners loathed to downsize, creating a bottleneck throughout the whole chain. This could therefore become a battleground policy in the lead up to the election.
