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UK property sales climb in November despite inflation and rising interest rates

City scape of tightly arranged property in Whitby, Yorkshire property
An estimated 107,190 property sales took place in November, which was 13% higher than November the previous year. Photo: Getty (Edwin Remsberg via Getty Images)

UK property sales saw an uptick in volume during November despite the housing market still showing hallmarks of a slowdown in the face of soaring inflation and rising interest rates.

According to the latest data from HMRC on Wednesday, there was a 4% month-on-month increase in transactions during the period, and an increase on figures from November 2021.

An estimated 107,190 house sales took place in November, which was 13% higher than November the previous year.

HMRC warned that year-on-year comparisons should be treated with caution after the stamp duty holiday, which ended in autumn 2021, caused house sales to bunch up earlier in that year.

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The report said house sales “have been stable in recent months, and remain similar but slightly elevated above pre-coronavirus levels”.

Read more: Property demand shifts from buying to renting amid financial uncertainty

“The 4% month-on-month increase in property sales volumes in November does not mean that the housing market got a second wind following the mortgage market chaos in the fallout of the ill-fated mini-budget in late September,” Myron Jobson, senior personal finance analyst at Interactive Investor, said.

“It takes months before sales are completed and as such, many transactions would have started before the infamous fiscal event.

He added: “However, the housing market is still exhibiting the hallmarks of a slowdown as inflation concerns, rising mortgage rates and an impending recession weigh on the property market.

“Mortgage lenders have reported a fall in new buyer enquiries in recent months, while recent Bank of England data shows the number of mortgage approvals for house purchases has waned.

“After a period of stratospheric growth, the burning question now is how low will house prices fall?”

Watch: Will UK house prices ever fall?

Nationwide (NBS.L) has predicted that UK house prices are set to fall by 5% next year as activity is expected to stabilise to just below pre-pandemic levels. Meanwhile the Office for Budget Responsibility (OBR) forecasted a 9% fall in the next two years.

Sam North, analyst at social investing network eToro, said: “The end of the stamp duty holiday in September last year meant transactions were forced forward and there was a subsequent lull towards the end of the year.

“November 2022 showed a marginal increase in October figures, but realistically, this is perhaps being driven by a desire to finalise moves before the end of the year, and a slight improvement in sentiment now that mortgage rates have rolled back a little.

“The real test will likely come into the start of 2023, as the cold weather starts to bite and interest rates continue going up, as is widely expected. For buyers and sellers alike, incomes will be squeezed, and this may well start to impact property costs and transactions alike.”

Read more: UK house prices to fall in 2023 amid rising mortgage rates – RICS

Meanwhile, Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Transaction numbers are holding up, particularly as we would expect things to start to slow down as we approach Christmas.

“Buyers with good mortgage offers are keen to complete before they expire, while others have to move for whatever reason, even if the market is more difficult than it has been.

“Even though the Bank of England hiked the base rate by half a point as expected last week, fixed-rate mortgages continue to move gently downwards, with five-year fixes breaching the 4.5% barrier and expected to go below 4% in the new year as the cost of funds falls, servicing pressure subsides and lenders attempt to originate new business.

“For some borrowers, a base-rate tracker with no early repayment charges is a better alternative until fixed-rate pricing comes down further.”

Watch: How does inflation affect interest rates?