January chill hits property market as sales plummet by a fifth
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, comments on the HMRC monthly property sales figures for January, showing January chill hits property market as sales plummet by a fifth.
Key points from publication:
- Property sales (non-seasonally adjusted) were 85,520 in January – down 22.2% from December, and down 12.6% from a year earlier.
- This is closer to typical January levels before the pandemic hit.
- Sales over the 2021/22 tax year so far are still higher than any other year for the past decade (1.167 million – non-seasonally adjusted).
HMRC recommends treating seasonally-adjusted figures with caution because of the impact of the stamp duty holiday, so we have used non-seasonally-adjusted figures.
Sarah Coles said:
“The January chill hit the property market, rapidly cooling buyer enthusiasm, and freezing sales. It takes 16 weeks from listing a property to completing a sale at the moment, so the drop in sales reflected a glacial October, facing the chilling impact of interest rate speculation and the stamp duty holiday finally dwindling away to nothing.
“We’re not expecting sales to pick up in the immediate future either. We’re battling the biggest squeeze on incomes in a generation, including a 54% hike in energy prices that’s going to force everyone to reconsider their spending. Anyone considering a move up the property ladder is going to think twice about whether this is the time to be stretching their finances even thinner. It means there’s a good chance the spring isn’t going to lift the chill in the property market.
“Agreed sales have been dropping for months, according to RICS, which is starting to feed through into the official figures. Part of this was down to the fact that all the heat caused by the stamp duty holiday dissipated with the tax break. It had encouraged people to pull sales forward and was always going to mean a lull afterwards. The shortage of properties on the market played a major part too, because even where there were buyers on the books, there was very little for them to get overheated about.
“Interest rates cooled the market, too. October saw speculation mount of an imminent rise, and while the Bank of England didn’t act until December, mortgage companies started raising rates. In practical terms, this was a rise from incredibly low levels, and there were still rock-bottom rates on offer, However, the psychological impact of both speculation and rate rises shouldn’t be underestimated.”
Kindly shared by Hargreaves Lansdown
Main photo courtesy of Pixabay
