Stretched affordability and uncertainty over the UK economy has hit the housing market over the past 12 months, resulting in a slowdown in the number of property sales.
The number of property transactions taking place in September was down significantly on last year, the latest figures from HM Revenue & Customs (HMRC) have revealed.
The data showed that on a non-seasonally adjusted basis there were 92,600 residential transactions in September, down 2% from August and 19% from the corresponding period last year.
Meanwhile there were 10,060 non-residential property transactions over the month, which is up 7% from the month earlier but 6% down on an annual basis.
While house prices are relevant when assessing the health of the housing market, there is an importance to the wider economy of increasing the number of transactions, according to Tom Bill of Knight Frank.
The Nationwide and Halifax both reported an unexpected house price rise in October.
A monthly increase of 1.1% meant the annual decline recorded by Halifax narrowed to -3.2% while Nationwide published almost identical numbers.
“Confusingly, this could be interpreted as a sign of strength or weakness,” Bill said. “More clarity will emerge in coming months, but for those whose glass is half-full, it shows how demand and activity are picking up. Could this be the fabled bottom of the market?”
Bill belies that there tends to be “an overreliance on house price movements when assessing the health of the market”.
“Falling house prices do not necessarily indicate a weaker pulse and vice versa,” he explained. “The UK housing market is going through a period of ‘price discovery’ as rates normalise after 14 years.”
Bill added: “House prices affect wider sentiment and inform the thinking of anyone buying or selling but arguably their biggest importance to the economy is in enabling a liquid housing market.
“The number of cars sold [new and second-hand] is a more informative statistic for UK PLC than the price they are trading at, for example.
“For every 100,000 houses sold, there is a net contribution of £956 million to GDP, a Knight Frank study found in 2020.
“We will find out in next week’s Autumn Statement whether the government has a plan to support this key sector of the economy.”
