In February, UK property transactions fell four per cent as the fall out of last September's mini budget continued to drive down the UK's housing market.
As buyers had to deal with higher borrowing costs because of higher interest rates, the sales of residential property fell 18 per cent during the year, with just 76,920 transactions across the UK.
Today s figures reflect the air of reservation from homebuyers that followed Liz Truss time in power and the mini-budget fallout that began, said Nick Leeming, chairman of Jackson-Stops.
After Prime Minister Liz Truss sacked the mini budget in September, mortgage rates went up to 6.65 per cent.
Higher rates added to the housing market volatility and seemed to slow down the sale process, as well as soaring inflation and fears that the UK would enter a recession.
In the last year, the cost of securing a house deposit soared by 32 per cent, making the prospect of owning a home even more inaccessible for prospective buyers, according to figures from Halifax.
In February, residential property transactions remained subdued as the fallout from last year's mortgage market turmoil continues to feed into completed sales, though numbers remain at more than 90 per cent of their pre-pandemic levels for the month, said Frances McDonald, director of residential research at Savills.
He continued: Lead indicators suggest that this slowdown is likely to continue as mortgage approvals in January were 41 per cent less than their pre-Covid average for the month, according to the Bank of England. Total agreed sales remain surprisingly robust, at 93 per cent of their pre-pandemic level in January, according to TwentyCi.
Cash buyers are supporting transaction levels and are continuing to take a greater share of the market, which is in line with our forecasts for this year. Jeremy Leaf, a former RICS residential chairman, said that the more stable picture in transactions after successive falls underlines the impact on the September housing market, as the mini budget has not quite run its course.
He said these figures are a better indication of activity over the past few months than house prices. Since interest rates and inflation are starting to fall, confidence has slowly returned, while the market is less competitive and more price sensitive. Many are encouraged to dip a toe in the water after failing to find a property in the stamp duty holiday-inspired frenzy. Mark Harris, chief executive of SPF Private Clients, said that transaction numbers may have dipped year-on-year due to uncertainty surrounding mortgage rates.
After years of little change in rates, borrowers are becoming accustomed to the volatility in the mortgage market, with the possibility of a hold in base rate at the next Bank of England meeting due to recent turmoil in the banking industry.
Swap rates, which underpins the pricing of fixed-rate mortgages, have started to fall again, and a number of high-profile lenders have reduced fixed rates, including Santander, which is launching a sub 4 per cent five-year fix today.
Borrowers may be tempted to wait for rates to fall further but there is a danger that they might not and trying to predict interest rates can be a dangerous game.