Mini-Budget ‘hangover’ pushes property sales to record low

February marked the slowest month for residential transactions in almost a decade, HMRC data suggests.

New HMRC transaction figures shows the taxman recorded an 18% annual drop in UK residential sales during February.

There were 76,920 sales on a non-seasonally adjusted basis, up 2% since January, and 90,340 once seasonally-adjusted - a 4% monthly decline.

The figure is down 6% compared with the more normal February 2019 market and has never been so low during the period, based on HMRC data going back to 2014.

Due to the time it takes to complete and register a property transaction, the data is seen as the first signs of the fallout from the mini-Budget in September 2022, that pushed up mortgage rates and shook financial markets.

Tom Bill, head of UK residential research at Knight Frank, said: “These figures underline the extent of the hangover from the mini-Budget for the UK housing market. 

“February’s drop in sales needs to be seen in the context of a housing market that effectively switched off for the last quarter of 2022 and only turned back on again after Christmas. For anyone who knows how long it takes to buy a house in the UK, it shouldn’t be a surprise when next month brings similarly weak numbers. 

“Demand and supply have been solid so far this year and sales volumes will eventually catch up against an economic backdrop that is proving stronger than expected. A recession looks likely to be averted and inflation forecasts have been revised down, although we think prices will come under pressure as more owners move onto higher mortgage rates and supply builds from the lows of the pandemic.”

Frances McDonald, director of residential research at Savills, suggested this slowdown is likely to continue as mortgage approvals in January were 41% below their pre-Covid average for the month, according to the Bank of England. 

She added: “However, total agreed sales remain surprisingly robust, at 93% of their pre-pandemic level in January, according to TwentyCi. 

“This suggests that cash buyers are supporting overall transaction levels and are continuing to take a greater share of the market, particularly at the top end, which is in line with our forecasts for this year.”

Nathan Emerson, chief executive of Propertymark, added: “Estate agents have seen an increase in homes coming onto the market which has bought buyers out of the woodwork and increased the number of potential buyers registering in branch.

“Most properties are sticking on the market for longer, feeling similar to 2019 and interestingly, the viewing to sale ratio has increased meaning on average, less viewings are needed per home in order to sell."

https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above/uk-monthly-property-transactions-commentary