House sales fell by 3% month-on-month in December, says HMRC

The number of UK house sales dipped by 3% month-on-month in December, amid signs that rising mortgage rates are having an impact on transactions.

An estimated 101,920 homes were sold in December 2022, which was 1% higher than in December 2021 but 3% lower than in November 2022, according to HM Revenue and Customs (HMRC) figures.

The statistics notes in the report state: “The impact of the recent increases in mortgage rates may now be being observed within these statistics.”

The report said house sales had generally been stable in recent months but were slightly weaker in December.

It added: “The impact of higher mortgages rates is only beginning to appear now because transactions data is based upon date of completion, and it typically takes between two to four months for a house sale to complete.

“The levels of current monthly property transactions are higher than late 2019, before the coronavirus (Covid-19) pandemic.”

Large peaks in house sales were previously recorded in March, June and September 2021, following the temporary impacts of a stamp duty holiday in England and Northern Ireland and similar tax breaks for the equivalent property taxes in Scotland and Wales.

In the financial year to date (April to December 2022), around 938,350 house sales have taken place.

During the same period year earlier, 1,049,450 house sales had taken place.

Tomer Aboody, director of property lender MT Finance, said: “Many buyers are still looking to proceed with their purchase in order to take advantage of pre-agreed mortgages with lower rates, secured earlier on in the year.

“How transaction levels will look in a couple of months’ time could be very different, however, due to higher mortgage rates and fewer buyers prepared to pull the trigger.”

Nick Leeming, chairman of estate agent Jackson-Stops said: “Buyers remain in the market and keen to go ahead in areas where supply is available, but where we are seeing a change is in the amount that they are willing to spend in order to proceed with a purchase.

“Buyers feel much more grounded in reality now with a long-term outlook, as we wave farewell to the frenzied pace of bidding wars seen six months ago.

“With some buyers choosing to put their property search on hold towards the end of the year, as often happens when the weather turns colder and Christmas plans take priority, this allows those continuing with their search to be more price-aware and willing to negotiate on optimistically priced properties.”

Graham Cox, founder of Bristol-based broker SelfEmployedMortgageHub.com said: “While the mortgage and housing market fundamentals have changed radically over the past six months, we’re still seeing reasonable levels of buyer interest so far in January.”

Matthew Thompson, head of sales at estate agent Chestertons, said: “Despite the uplift in viewings and new properties coming onto the market in December, we have noticed that there are fewer people looking to sell in the first part of this year, with many preferring to wait and observe how the market develops.

“This will inevitably lead to fewer properties coming on the market during the first quarter of this year and buyers will therefore have to brace themselves for a more competitive market with less choice.”

Jeremy Leaf, a north London estate agent, said: “Lack of supply continues to hold back buyers.”

Nicky Stevenson, managing director at estate agent group Fine & Country said: “Rising mortgage rates overshadowed the property market in the final months of the year, and may still hold back transaction levels in the early part of 2023.

“However, there are signs that the housing market is adjusting to the new normal.

“Buyers have got used to a higher-rate landscape and are flocking back to the market, motivated by the possibility of securing a good deal on their home.”