- Total home sales across 2014 up 18% year-on-year, as stamp duty reforms boost activity in December
- Annual growth retreats back into single figures, as house prices pause in December
- Values in London & the South East cooling, while price growth across other regions remains steady
- Growth accelerates at top end of the market in 2014, but price rises slowing at bottom rungs
Adrian Gill, director of Reeds Rains and Your Move estate agents, comments:
“2014 was the year of the first-time buyer, with the second Help to Buy scheme parachuting further assistance to aspiring homeowners throughout the country, and ensuring that many potential buyers could still navigate around the stricter mortgage regulations and affordability checks, in the slipstream of higher LTV lending. During 2014 as a whole, completed house sales climbed 18% on 2013 levels – reaching the highest volume witnessed since 2007. While the bulk of this uplift happened in the first half of the year, 2014 finished at a sprint too – with completed house sales in December jumping 17% on the previous month, against the usual seasonal tide, as the Chancellor’s remodelling of the age-old stamp duty barrier flooded the market with buoyed consumer confidence.”
Dr Peter Williams, housing market specialist and Chairman of Acadata, comments:
“We estimate that the number of housing transactions in England & Wales in December 2014, as recorded by the Land Registry, will total some 86,500. This level is 17% higher than that seen in November 2014. On average, based on the last 18 years data, December sales volumes equal those of the preceding month, so this 17% increase represents a non-seasonal jump in demand. However, as we reported last month, sales in November 2014 were unseasonably low. Combining the November and December 2014 sales levels therefore best reflects the true trends in the market, which show sales volumes in England & Wales at an average 80,000 per month. This figure for the two months in 2014 is 3% lower than the average 83,000 sales achieved in the same two months of 2013.
“As can be seen below, sales volumes in 2014 have been consistently higher than the previous four years, with the one exception of November, when transactions fell below those achieved in November 2013. Given the buoyancy in the December 2014 market we have revised our estimate for the calendar year 2014 to a total of 950,000 transactions in England & Wales, based on the Land Registry definitions. This represents an increase of 18% over 2013 levels, although as Figure 3 shows, the major change in sales volumes took place in the first half of 2014. It will also be the highest level of transactions in any year since 2007, when sales in England & Wales totalled 1,277,000.
“It will be interesting to observe what happens to transaction levels in 2015. If interest rates remain at 0.5%, at least until the general election, consumer confidence may be expected to be relatively upbeat. Average earnings are also starting to climb in relation to the consumer price index. Both of these factors suggest that sales volumes will be as strong in 2015 as 2014. However on the downside factors that may be expected to have an unsettling effect on the market are: the extended MMR rules being applied by the FPC which are making it more difficult to obtain mortgage finance; the expectation of an interest rate rise at some point in 2015; and the general election. In addition, the threat of a mansion tax may be expected to depress sales volumes at the top end of the market. Also we have the current macro-prudential controls in place with the possibility that more might be done should circumstances require it. We will keep readers advised of these trends as they arise.”
