Despite the rise in mortgage rates, the UK housing market continues to display remarkable resilience. According to the latest data from HM Revenue & Customs (HMRC), housing transactions have increased for the fourth consecutive month. In April 2024, transactions rose by 5%, reaching 90,430 up from 86,420 in March 2024. Remarkably, this figure is also 10% higher compared to April 2023, marking the first year-on-year increase since November 2022.
Optimism Amidst Rising Rates
In The Negotiator, Anthony Codling, Managing Director of Equity Research at RBC Capital Markets, notes that despite the current challenges, buyers are optimistic about future reductions in mortgage rates, which could be influencing their willingness to purchase homes now. Jeremy Leaf, a former RICS Residential Chairman and north London estate agent, echoed this sentiment by highlighting the value of transaction numbers over house prices as a more comprehensive indicator of market health. Leaf pointed out that even against the backdrop of concerns over mortgage payments and inflation a few months ago, the market has shown considerable resilience, buoyed by a strong employment landscape that has eased fears over mortgage affordability.
Listings Increase Fuels Transactions
Tom Bill, Head of UK Residential Research at Knight Frank, attributed the pickup in transaction volumes to an increase in property listings, especially during the optimistic inflation forecasts earlier in the year. Despite sales being 12% below the five-year average, the expectation is that they will remain robust through 2024, potentially aided by a forecasted 3% rise in average UK house prices as interest rates might be cut later this summer.
Buyers Securing Fixed Mortgages
Matt Thompson, Head of Sales at Chestertons, pointed out that most buyers in April likely secured fixed-rate mortgages before any rate hikes, which shielded them from the immediate impacts of rising mortgage rates. This pre-emptive move by buyers has helped sustain transaction volumes despite the financial uncertainties.
National Increase in Property Listings
Nick Leeming, Chairman of Jackson-Stops, reported a 13% annual increase in property listings across their national network, with a significant 49% rise in new instructions in May alone. This surge in listings has helped maintain consumer confidence in the housing market.
Election Anticipation and Housing Market Speculation
As the general election approaches, industry experts are closely monitoring the potential impacts on the housing market. The anticipation of tax reforms and other policy announcements from the main political parties could influence home buying decisions in the short term. Nathan Emerson, Chief Executive at Propertymark, expressed optimism about the increased market confidence year-on-year. However, he cautioned about a possible slowdown this summer as buyers wait to see the election outcomes and the proposed policies by various political parties.