House sales back at 2007 levels but market levels off with mortgage restrictions set to dampen buying favour
Mon 21 Jul 2014
More homes were bought and sold in June than in any month since the end of 2007, before the credit crunch took its full toll on the property market, figures showed today.
HM Revenue & Customs said the number of residential property transactions hit 109,580 in June, a figure equalled in November last year but not exceeded since November 2007. However, the official figures also pointed to a levelling off in house sales this year. On a seasonally adjusted basis, the June total was 0.2 per cent lower than in May.
Moving the market: House sales are at recent highs, but have leveled off this year. Long-term data shows that home sales had been running above 160,000 a month at points prior to the financial crisis, but plummeted to lows around 40,000 once the bank lending seized up and the recession pushed buying out of reach for many. Recent peaks in residential sales have come around tax changes. A stamp duty 'holiday' that ended in December 2009 drove sales higher, and there was another, smaller, peak and trough in March and April 2012 due to the ending of stamp duty holiday for first time buyers.
The figures from HMRC represent transactions once stamp duty has been paid. This means they are unlikely to cover the period from April onwards that has seen a slowdown caused by changes to the mortgage market, as only a fraction of these sales are likely to have been completed in time to be counted in the numbers.
Leveling off: Residential sales have recovered in the past 18 months. The Mortgage Market Review required lenders to probe applicants' finances more closely, including to see if they could withstand higher interest rates in the future. This has caused a slowdown in mortgage approvals. Harder to measure is sentiment among buyers.
The Bank of England has warned interest rates could rise sooner than some expect and has also introduced a measure to limit high loan-to-income borrowing to 15 per cent the loans a lender grants. The anticipation of slower price rises, or even falls, may be putting buyers off, according to experts. Peter Rollings, chief executive of estate agents Marsh & Parsons, said: 'The UK property market is singing a different tune to that heard at the start of this year.
The fierce competition for properties and unprecedented house price growth has subsided as a new wave of supply has come onto the market, stabilising price rises and restoring normality to trading conditions.
Peaks and troughs: Sales collapsed after the financial crisis hit in 2007, and remain at around two-thirds of their pre-crisis level. 'Both buyers and sellers alike are benefitting from this new calmness in the market, with a greater array of available property to choose from and slightly slower pace of activity making stepping onto the ladder or trading up a less daunting prospect.'The implementation of tighter lending criteria and affordability checks has lengthened the borrowing process and cooled the market during this transitional phase.'
Jonathan Hudson, founder of estate agent Hudsons Property, said: 'The property market is cooling but still strong. We are still achieving top prices but some of the urgency has subsided. 'Certain measures put in place, like the overseas buyers capital gains tax and potential interest rate rises have not really affected the market. However, tighter lending criteria have slowed increases and buyers are being more considered before offering. This is also allowing more property to reach the market, giving buyers more choice.'
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