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Your November market update

Interest rates hold and transactions tumble — we've got it all in your November market update.

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Every month, we talk you through the biggest property headlines — looking past the jargon and hyperbole so you can see how big events really affect buyers and sellers. This month is all about percentages, as we saw some very little numbers — and some very big ones — making headlines. 

Why was it news that interest rates didn’t go up? And what does the fall in transaction numbers mean? We’re here to answer your questions. It’s definitely been a dramatic period for the housing market, so we’ll break down everything you need to know. Welcome to your November market update. 

Interest rates hold — for now

One headline-making moment in November was that the Bank of England chose not to raise the base rate. Now, normally something not happening wouldn’t be big news — and though newspapers were shouting a lot about the effect this might have on the housing market, it might not be instantly clear, so we’ll talk it through. 

Firstly, the reason it was big news that the Bank didn’t raise interest rates is simply because people thought they would. There were lots of rumours going around that, in an effort to dampen inflation, the base rate would rise from the record low of .1% and up to .25% — this didn’t happen. It’s important to remember that interest rates were drastically cut in March 2020 to help battle economic strain from Covid, so this would have been the beginning of reversing that process. 

Why does this matter for the housing market? Well, low interest rates make it easier and more affordable to borrow money — that means more buyers. More buyers means more demand — and that means the sky-high prices we’ve been seeing recently. A rise in interest rates could put buyers off. Although the differences in percentage seem tiny, even the smallest interest rate rise can make a huge difference in monthly mortgage payments.

And there’s still a good chance interest rates will go up in the near future, in fact many experts have their eye on a December hike. With demand far outstripping supply, we’ll have to see how much any interest rate rise actually impacts the market — so keep your eyes peeled. 

Winter coming often means a slower market and interest rate hikes could put off buyers, but with so much demand and so little supply, the market may just continue to rally. "

Transaction rates fall 52%

This November headline looked partially dramatic — as newspapers shouted that transactions fell 52.0% in October. We saw words like “tumbled” and “plummeted”, but what does it really mean? 

Well, it was a drop — a big drop. Transaction rate just means the number of sales completed in a given month, so there were a lot fewer sales in October than in September. But it was also a fairly expected drop, with one big factor at play.  

“Property transactions cooled in October after the flurry of activity around September’s stamp duty holiday deadline,” Sam Mitchell, CEO of Strike, told The Independent

Essentially, September was your last chance to get the tail-end of the stamp duty holiday — so there had been a huge flurry of transactions as people tried to get their sale finished in time.

So in October, we saw 52% fewer transactions than the month before. Perhaps more interestingly, we also saw that transactions were 28.2% lower than a year earlier — October 2020. Will this be a sign of the market slowing, or just a temporary post-stamp duty holiday dip? Only time will tell. Winter coming often means a slower market and interest rate hikes could put off buyers, but with so much demand and so little supply, the market may just continue to rally. 

It's safe to say that the market is fairly unpredictable at the moment — we know there is a chronic supply and demand problem, but the Bank of England may take big steps to keep inflation under wraps. Any predictions of the future are just that — predictions. We'll have to just keep watching what happens. So we'll be back next month, to talk you through everything you need to know.