30 April 2024
If you are covering the latest UK monthly property transactions data, quarterly stamp duty statistics, or the Bank of England’s money and credit statistics, please see the following comment from Karen Noye, mortgage expert at Quilter:
“There has been a distinct lack of momentum in the housing market of late, and new data from HMRC today suggests that this trend persists, despite now being in a typically busier period for house sales.
“The figures reveal that though there was a small 1% uptick in seasonally adjusted residential property transactions in March compared to February, rising to 84,200, this was still 6% lower than the level of transactions seen in March 2023.
“This month-on-month increase can be attributed largely to the dip in mortgage rates at the start of the year. However, mortgage rates have since been gradually climbing back up which may have caused prospective homebuyers to put their plans back on hold.
“Higher mortgage rates still appear to be impacting buyer demand which has consequently cooled the market, resulting in this lower level of property transactions. New figures from the Bank of England this morning reiterates this, revealing a significant drop in the net amount of mortgage debt borrowed, which was just £0.3bn in March, a considerable decline compared to £1.6bn in February.
“Just this week, large mortgage lenders such as TSB and Halifax upped their rates, following previous rate hikes announced last week from HSBC, Barclays and NatWest due to an uptick in swap rates. When combined with the ongoing cost of living pressures, many prospective buyers will continue to face an uphill battle when it comes to affordability, particularly those first-time buyers who will also likely have found it much harder to save enough money for a deposit.
“Though property transactions remain subdued at present, the market could see a turning point as we approach the summer months. Bank of England figures today show new mortgage approvals rose from 60,500 in February to 61,300 in March – the highest number of net approvals since September 2022. The Bank of England is now expected to cut interest rates later this year as inflation has continued to ease, falling to 3.2% in March. A fall in interest rates could present a more favourable borrowing market and reignite demand, as many buyers have been in ‘wait and see’ mode while patiently waiting for a rate cut to ease affordability pressures.
New stamp duty data
“It has been rumoured that the government is considering raising the stamp duty threshold to £300,000, which would save buyers up to £2,500 and could help reignite the market. However, this would provide no benefits to first time buyers who are exempt from stamp duty on properties up to £425,000, and risks being inflationary in the short term.
“New stamp duty figures from HMRC this morning show that residential property transactions in Q1 2024 were 19% lower than in the previous quarter, and 8% lower than in Q1 2023, and residential property receipts in Q1 2024 were 27% lower than in the previous quarter and 13% lower than the same period in 2023.
“This significant slowdown could further prompt the government to up the stamp duty threshold in the hopes of increasing momentum in the market. Given 121,000 people purchased properties that cost between £250,000 and £300,000 in 2023, the public could have saved a maximum of circa £300 million in the last year alone had the stamp duty threshold been set at this higher amount, so the government may also hope such a move would help drum up support in the lead up to the election.”
