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In Focus Risk
The big freeze
January chill hits property market as sales plummet by a fi fth
Sarah Coles Senior personal fi nance analyst, Hargreaves Lansdown
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 2021-2022 tax year so far
are still higher than any other year for the past decade (1.167 million – non-seasonally adjusted).
Monthly details Her Majesty’s Revenue and Customs (HMRC) published monthly property sales for January: Monthly property transactions completed in the UK with value of £40,000 or above –
GOV.UK (
www.gov.uk) HMRC recommends treating seasonally adjusted fi gures with caution because of the impact of the stamp duty holiday, so we have used non-seasonally adjusted fi gures.
It takes 16 weeks from listing a property to completing a sale at the moment, so the drop in sales refl ected a glacial October, facing the chilling impact of interest rate speculation and the stamp duty holiday fi nally dwindling away to nothing
Chill 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 refl ected a glacial October, facing the chilling impact of interest rate speculation and the stamp duty holiday fi nally dwindling away to nothing. We are not expecting sales to pick up in the immediate future either. We are battling the biggest squeeze on
incomes in a generation, including a 54% hike in energy prices that is 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 fi nances even thinner. It means there is a good chance the spring
is not 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 offi cial fi gures. 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 Interest rates cooled the market too. October saw speculation mount of an imminent rise, and while the Bank of England did not 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 off er, However, the psychological impact of both speculation and rate rises should not be underestimated. CCR
40
www.CCRMagazine.com March 2022
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