Business

House sales rose by 5% in 2012 to five-year high, says HMRC

Houses
Image caption The UK's property market is coming out of hibernation, the figures suggest

House sales in the UK rose by 5% last year, according to figures from HM Revenue and Customs (HMRC).

The number of completed sales was 932,000, up from 885,000 the previous year, and the highest since 2007.

The revival has been partly due to the Bank of England's Funding for Lending Scheme (FLS), which has started to increase the flow of mortgage funds and make mortgages cheaper as well.

Various commentators have suggested that sales will keep on rising in 2013.

The HMRC figures are part of a growing body of evidence that the market is picking up in terms of sales, if not prices:

  • At the beginning of January, a survey of mortgage lenders by the Bank of England found that lending had risen in the last three months of 2012, and would keep on rising "significantly" in the first three months of this year
  • The Bank also reported that in November, the number of new mortgages approved for home buyers, but not yet lent, rose to 54,036. That was the highest November figure for three years and was part of a steady trend of rising numbers of approvals since early last summer
  • The Council of Mortgage Lenders (CML) reported recently that new mortgage loans made to first-time buyers rose by 8% in November to 21,700 - a rise of nearly a quarter on the year before, and their highest for nearly three years
  • The total number of new mortgages, for all types of buyer, rose by 6% that month to 52,700, which was 13% more than the year before
  • The Royal Institution of Chartered Surveyors (Rics), whose monthly surveys have a good record of keeping a finger on the pulse of the property market, has found that its estate agent members are expecting sales to rise

Simon Rubinsohn, the chief economist at Rics, said the latest figures were encouraging, but with the wider economy still in difficulty, sales would still stay much lower than they were before the start of the banking crisis in 2007.

"What we have had is a decent recovery in the second half of the year, helped by a little more confidence due to the FLS, which has helped give a bit more accessibility to mortgage funds," he said.

"We think there will be a further increase in activity, with the FLS providing further support along with the government's NewBuy scheme."

The aim of the FLS, which was launched at the start of last August, is to do more than just stimulate the housing market.

The Bank of England wants the cheap funds it has to offer - in the region of £60bn - to be lent by banks and building societies to other businesses, as part of its attempts to stop the economy sinking back into recession.

Further figures published by the Bank on Monday showed that it has quite a task on its hands.

Its quarterly Trends in Lending report found that the stock of lending to non-financial businesses had continued to shrink in the three months to November, and had dropped by about £4bn in the three months to November.

"The contraction in lending to businesses overall was reflected across all firm sizes, with the annual rate of growth in the stock of lending to both small and medium-sized enterprises (SMEs) and large businesses negative over this period," the Bank said.

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