Housing transactions roar back in September
Housing transactions surged by more than 20% in September, according to the latest government statistics.
The provisional seasonally adjusted estimate of UK residential transactions in September 2020 is 98,010, which is very similar to September 2019 at only 0.7% lower and 21.3% higher than August 2020.
Alan Cleary, Managing Director for Mortgages at OneSavings Bank said: “Housing transactions continued to recover strongly in September which is great news for the market. At close to 100,000, the number of transactions was similar to a year earlier and in line with the monthly average in recent years.
“With mortgage approvals for house purchase having risen to their highest levels since before the 2008 financial crisis, housing transactions are likely to rise further in the coming months as borrowing costs look set to remain at historically low levels. Bolstered by the Government’s additional measures to support employment and boost demand during the winter months, housing market activity seems likely to strengthen further in the period immediately ahead.”
Government data suggests that the increase is likely due to the continued release of pent-up demand within the property market since March 2020 and early impacts from the temporarily increased nil rate band of SDLT.
Andrew Southern, Chairman of property developer Southern Grove, said: “Homes are flying off the shelf and this trend still looks like it has further to run. If true, it will have taken a pandemic to shift transactions up a gear and the irony won’t be lost on the industry. However, this doesn’t have to be a flash in the pan.
“This current expansion of activity is not all down to financial incentives and the Government needs to find ways of sustaining this increase in sales beyond the New Year when the March deadline for the end of the stamp duty holiday will be staring buyers down. There is already talk of some missing out because of severe delays to the conveyancing process tripping up even those who have had offers accepted and are trying to exchange now.
“If sales do slow it won’t be due to a lack of demand. The UK’s property story has always traced the path of a market that has occasionally waned despite ferocious demand. The fundamentals tell you the UK market should always be busier than it has been during the past decade.
“Housebuilders want to see the Government recognising it has an opportunity to keep this momentum going, and reforming stamp duty would be a good place to start. The financial burden doesn’t necessarily have to be reduced but it does need to be altered so it is levied over a period of time. Now would be the perfect moment to realise the largest possible dividend from a change of this kind.”
Residential transactions decreased significantly in April 2020, reflecting impacts from coronavirus and public health measures in response. Provisional transactions have since gradually increased month-on-month.
Joshua Elash, director of property lender MT Finance, said: “The market continues to bounce back. An uptick in transactions from August across the property market points clearly to the positive impact of the Chancellor’s stamp duty initiatives as well as the continued confidence held by home owners and investors alike in the solidity of the market as a whole.
“The fact that the figures in relation to both residential and non-residential transaction volumes are only slightly down when compared to September 2019 is hugely significant. Confidence and demand have held strong after months of the Covid-19 pandemic.
“As long as there is not a sudden and sharp tightening of credit criteria, which would adversely impact on liquidity, there has to be an ever increasing confidence in this market’s ability to ride this pandemic out without a significant adverse adjustment.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, concluded: “Transactions are always a better measure of market strength than more volatile house prices. Although a little historic as these numbers reflect sales which were agreed at least some months previously, they help to show the resilience of the market during the economic and pandemic turmoil.
“What we have noticed since activity cooled a little over the last few weeks is that very few buyers are withdrawing from transactions and very few instructions are being withdrawn from sale. Prices are sometimes being renegotiated to take into account current realities – in other words, much the same as was happening immediately after lockdown at the end of March.”
Source: Show House News
