The UK housing market is set to record more transactions than last year despite buyers being hampered by higher mortgage rates and a cost of living crisis. That’s according to eXp UK, the platform for personal estate agents, who analysed how annual property transactions and GDP have risen and fallen since 2005.
It’s expected there will be an estimated 920,000 transactions in 2023, 1.3% more than the 909,000 recorded in 2022.
However that total is still below the average between 2005 and 2022, which stands at 991,000.
The best and worst years
There is a big gap between the best and the worst years.
Since 2005 the best years in terms of GDP growth are 2014 (3.2%), 2021 (7.6%) and 2022 (4.1%).
The worst meanwhile are the financial crisis-affected years of 2008 (-0.2%) and 2009 (-4.5%), as well as 2020, (-11.0%) when the market hit the brakes due to the pandemic.
The transaction count in the three worst years are on average 36.6% lower than the three best.
GDP growth
Even when market conditions are less than perfect GDP tends to improve, as has been the case every year with the exception of 2008, 2009 and 2020.
While 2023 is unlikely to go down as a brilliant year, we’re still set to be in positive territory, as GDP growth is expected to reach 0.4% according to a forecast by the IMF.
This is below the average GDP increase since 2005, which sits at 1.3% per year.
Transactions – a history
Looking at the history of properties changing hands, the transaction count peaked before the financial crisis, at 1.5 million in 2006 and 1.43 million in 2007, before plunging to just 744,000 in 2008.
They stayed at a relatively low level until 2014, when they broke the 1 million barrier once again, reaching 1.06 million in 2014 and staying around the same level until 2020, when the pandemic saw them fall back to 832,000.
Activity rebounded in 2021 with the help of government measures like the stamp duty holiday, as there were 1.14 million transactions, before they dropped to 909,000 in 2022.
Head of eXp UK, Adam Day, commented:
“The market is performing steadily despite all the negative talk about housing and the economy, as despite high mortgage rates and affordability troubles it is estimated that there could be more transactions than last year.
Analysis of the worst years shows we’re a long way away from years like 2007 and 2008, when the markets were truly in meltdown and people were staying put.
After years of low mortgage rates, increases were always likely to bite hard, so in that context 2023 looks to be a year where the markets weather the storm. It’s far from the best year when it comes to both GDP growth and transactions, but it’s not armageddon.”
