Housing transactions plummet as first-time buyers hit 10-year low

The latest housing market statistics show that the number of housing tractions fell by almost a quarter in November compared with last year with the number of first-time buyers also at a 10-year low.

The latest figures from HMRC show that UK housing transactions fell by 22% in November 2023 to 87,640 compared to the same month in 2022. Experts have blamed an affordability crisis and sky-high mortgages as the principal causes.

The Yorkshire Building Society reported that the number of first-time buyers in the UK mortgage market plummeted by 21% to 290,000 in 2023 compared with 2022 ­– the lowest figure for a decade.

The Halifax House Price Index for November showed a rise of 0.5% to £283,615, but down 1% on 2022, and the bank has forecast a decline of 2% to 4% in prices by the end of 2024, driven by the collapse in demand for housing.

Fewer house sales is bad news for KBB retailers who generally benefit from supplying new kitchens and bathrooms to buyers moving home.

Director of Halifax Mortgages Kim Kinnaird said: “The resilience seen in house prices during 2023 continues to be underpinned by a shortage of properties available, rather than any significant strengthening of buyer demand. That said, recent figures for mortgage approvals suggest a slight uptick in activity levels, which is likely as a result of an improving picture on affordability for home buyers. With mortgage rates starting to ease slightly, this may be leading to increased buyer confidence, seeing people more inclined to push ahead with their home purchases.

“However, the economic conditions remain uncertain, making it hard to assess the extent to which market activity will be maintained. Other pressures – like inflation, the broader cost of living, overall employment rates and affordability – mean we expect to see downward pressure on house prices into next year.”

Although the Bank of England’s latest decision to hold interest rates at 5.25% has been welcomed by many experts, David Hannah, group chairman of Cornerstone Tax, believes that with the ONS reporting a fall in the inflation figure to 4%, the BoE should look to cut base rates.

Hannah said: “November inflation figures and mortgage approvals should indicate an overall cooling off of the UK economy which, if we are to avoid a recession next year, must be acknowledged by the BoE and, in an effort to avoid a sudden crash of inflation, will increase pressure to start reducing interest rates sooner rather than later.
“Economies have momentum, with the rate of inflation continuing its downward trajectory towards the BoE’s threshold of 2% – the MPC must start thinking about the optimum time to cut rates. Recent forecasts from Halifax have predicted that housing prices are tipped to continue falling by the end of 2024, implying that prospective buyers will still be put off by high mortgage rates. I’d urge the MPC to seriously consider cutting the interest rate in their next meeting, even a reduction by a quarter percentage point would signal optimism within the UK economy, with a target base rate of 3% to 3.5% being the overall goal if the BoE want to truly prioritise prospective buyers in the new year.”

Hannah also believes that Stamp Duty is “long overdue for an overhaul” and suggests that an increase in threshold levels would “stimulate activity at the lower end of the property market and allow first-time buyers to reduce the amount they need to borrow”.

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