October witnessed a challenging period for the UK property market, with sales dropping significantly compared to the previous year, according to the latest data. Property sales, when adjusted for seasonal factors, stood at 82,910, marking a 21% decrease from last year and a 3% fall from September. This decline represents the second consecutive monthly drop, largely attributed to the rising mortgage rates since spring, which impacted the deals agreed upon during that period.
October’s performance was notably weak, with Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, stating, “It was a particularly miserable October for sales completions – reflecting how tough life was for sellers in the summer.” She highlighted the peak in mortgage rates during this period, causing a slowdown in sales. However, Coles also mentioned a silver lining, noting a slight improvement with easing mortgage rates, which could offer a glimmer of hope. “Mortgage rates have been falling since August… We’ve seen a small uptick in mortgage approvals for house purchases,” she explained, suggesting a potential shift in the market.
Despite this, the market still faces challenges, as evidenced by Zoopla’s recent findings of significant annual price drops and a substantial average discount on sales. The Royal Institution of Chartered Surveyors (RICS) also reported a continued decline in buyer numbers and sales for the 18th consecutive month.
Coles emphasized the long road ahead for a robust recovery, suggesting a gradual return of buyer optimism and a potential small rise in completed sales by early 2024. She advised potential buyers to utilize this period to strengthen their financial position, mentioning the benefits of schemes like the Lifetime ISA.
Terry Woodley, Managing Director of Development Finance at Shawbrook, also commented on the situation, acknowledging the muted residential transaction figures due to high interest rates and economic uncertainty. However, he noted a positive trend in commercial property transactions and expressed optimism about future market improvements. “Hopefully, the Government’s Autumn Statement will inject some positivity into the market,” Woodley said, highlighting the adaptability of developers in these challenging times and expressing hope for an upward trend in property transactions moving into 2024.