ANALYSIS: Transactions are the key to understanding the property market
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The majority of statistics that we see in the national press concern property prices. These are also the stats that give buyers and sellers the most reason to worry.
However, whether property prices rise or fall, people still have to move and last year, there were forecasts of prices falling by anything from 5% to 20% or more. Few focused on forecasting what I think are the most important statistics for the industry: transactions. Savills forecast a fall from the average 1.2million transactions to 850,000 transactions, while Zoopla, a more cheerful 1-1.1 million.
After a year of rising mortgage rates and a cost of living crisis, even though most people own a home outright and 50% of buyers buy with cash or with a mortgage Loan to Value of 50% or less, we saw property prices fall by a few per cent only.
Some areas saw transactions increase – while others saw them plummet.”
For the industry though the falls in transactions hit hard – with TwentyCi reporting just over 1,060,000 sales, an average fall of 12%. Some areas saw transactions increase – while others saw them plummet.
But, just as with average house prices, this ‘average’ fall disguises the fact that some areas actually saw more sales than a normal year, while others saw much bigger falls – and this information is essential for any business reliant transactions, from lender through to removal company.
The good news is that thanks to the cracking data we are receiving from stats experts, we have a breakdown of how good years – and bad years – perform transaction wise, making it easier to plan and potentially forecast for good and bad times in the future.
TwentyCi top performing city transactions
The data in this table shows what a huge difference a good year – and a bad year – can make. It also shows that whatever we hear that’s happening nationally, knowing what’s happening in each local area is much more important. And, if you can, working out why your area is bucking the trend – upwards or downwards.
The transaction data for 2019 is helpful because it’s considered to be a ‘normal year’ prior to the pandemic. The 2023 data is useful because this can be considered a ‘bad’ year of how far transactions can fall and although it’s not foolproof, it’s a good ‘guide’ to knowing in the future what kind of workload you may have if we have another bad year in the future.
What you can also see is that although some areas were recording falls 2023 vs 2022, versus a ‘normal’ year the likes of Aberdeen, London and Sunderland were actually doing pretty well.
TwentyCi bottom performing city transactions
In contrast, these are the cities that really struggled last year versus previous years – and why they may feel things went a lot worse than people were reporting.
What’s interesting about this information is there is no ‘pattern’ to those that did well and those that didn’t – from a geographic perspective.
There is no ‘pattern’ to those that did well and those that didn’t – from a geographic perspective.”
In the past, we would always see London rise or fall, then this would spread to the home counties, then out to the Midlands/South and finally to Wales/Scotland. Now we see some cities from Exeter to Bolton doing not so well while London to Sunderland held up incredibly well.
All we need to do now is understand why there is such a vast difference in performance – but I’ll leave that to the local expert agents!
For more information from TwentyCi, do sign up to their excellent market reports: https://www.twentyci.co.uk/property-homemover-report/
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