Cash Buyers On The Lookout
The future looks a little bit brighter for transactions in the housing market
Transactions are the best signal of the health of the housing market and as we approach the end of 2016, there is some concern that they have not recovered faster. Although chances are we will end the year with overall transactions in the UK being slightly above that of 2015.
But this achievement is partly due to the unprecedented spike in transactions in the lead up to the new stamp duty rules – a 73 per cent year-on-year growth in March alone. Much of the year since has been marked by decreasing number of transactions.
Yet there is encouraging news for transactions in the coming months. Mortgage approval numbers are a good gauge of future transactions and, following the lull in activity in the wake of the EU referendum results, approvals are picking up. October marked the first time in the year where we have seen consecutive monthly increases in approvals. They grew by 7 per cent between August & September and September & October. This is good news for transactions. Recently the conversion rate of around 80 per cent of approvals go on to complete – so as mortgage approvals grow so too do transaction numbers a few months after.
What is also encouraging is that first-time buyers have been driving this revival. Our former chancellor’s policy on the stamp duty surcharge, loading the scale in favour of first-time buyers over landlords, looks to be having the intended effects as more first-time buyers seem to be entering the market. Since the stamp duty introduction, first-time buyer mortgages have been trending up as landlords’ have declined. And with house price growth set to slow next year, they have more opportunities to start their home owning journey.