UK housing market slowed further in December

Transactions fell by 3% but estate agents hoping for 'burst of activity' this year

For sale signs in Islington, London. Figures from the HMRC show a steady decline in the number of transactions in the UK's residential housing market. PA
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The UK housing market slowed again in December, according to the latest government estimates.

Residential transactions dropped to 108,960, down 3 per cent compared with November and 1 per cent on December 2021 said HMRC, the UK Revenue and Customs department.

The provisional figures tally with other views of UK housing market, which show a steady decrease in transactions in recent months.

“While December often sees a slowdown, with prices predicted to continue to fall in the first half of the year many in the market will be hoping the new year brings with it a renewed burst of activity as buyers look to secure deals” said Emma Cox, managing director of real estate at Shawbrook.

“Mortgage rates, while still higher than this time last year, are beginning to come down, giving the market a renewed sense of optimism for the year to come.

“Competition will likely remain fierce among investors, many of whom will be looking to add to their portfolios this year, and buyers will need to keep their wits about them when signs of price growth return to the market.”

Tomer Aboody, director of property lender MT Finance, said: “Many buyers are still looking to proceed with their purchase in order to take advantage of pre-agreed mortgages with lower rates, secured earlier on in the year.

“How transaction levels will look in a couple of months' time could be very different, however, due to higher mortgage rates and fewer buyers prepared to pull the trigger.”

A real estate agent in London. Estate agents say there are signs the UK housing market is adjusting. EPA

Lack of supply

Meanwhile, Jeremy Leaf, a north London estate agent, said a lack of supply was holding back buyers.

Nicky Stevenson, managing director at estate agent group Fine & Country, said: “Rising mortgage rates overshadowed the property market in the final months of the year, and may still hold back transaction levels in the early part of 2023.

“However, there are signs that the housing market is adjusting to the new normal.

“Buyers have got used to a higher-rate landscape and are flocking back to the market, motivated by the possibility of securing a good deal on their home.”

Non-residential properties

HMRC also said the number of non-residential transactions in the UK in December was 10,810, which is 5 per cent lower than a year earlier, but 9 per cent higher than November.

Non-residential includes commercial property and agricultural land. Also, six or more residential properties bought in a single transaction would be considered a non-residential transaction.

The figures are provisional and will be updated in the coming months, HMRC said.

Updated: January 24, 2023, 12:04 PM