Property sales down 3% as industry prepares for deals to ‘plummet’

Property sales down 3% as industry prepares for deals to ‘plummet’

Residential property transactions fell 3 per cent in October but developers anticipate house sales to “plummet” further in the coming months.

While first-time buyers are still active in the market - driven to purchase by the “astronomical level of rents” - brokers say they are “taking much more time to make their decision” on a property in the hope house prices will drop.

Anecdotally, estate agents have also told FTAdviser that over the past four weeks buyer interest “has gone quiet” despite landlords looking to exit their portfolios and free up stock on the market.

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In October, there were an estimated 110,850 UK residential transactions, according to non-seasonally adjusted data published by HM Revenue and Customs today (November 22).

While transaction levels were 29 per cent higher than October 2021, experts have put this difference down to lower-than-normal levels last year following the stamp duty holiday.

In October 2021, property transactions fell by nearly half - the lowest house sales that month had seen in nine years.

Joe Garner, managing director at property developer NewPlace, said so far in the fourth quarter demand for new build property “has fallen off a cliff”. 

“Unless sellers are really motivated or have to sell, it is likely transactions will plummet as people stay put and look to ride out the storm,” said Garner.

“Until a government-backed, UK-wide support scheme for first-time buyers is reintroduced, it is unlikely we will see any major increase in transactions. 

“However, as interest rates stabilise and inflation is brought under control, we could see transactions recover as the great property cycle machine clicks back into gear.”

This month, major UK developers have pointed to falls in sales.

Taylor Wimpey said the number of buyers pulling out of deals had jumped by more than 50 per cent.

Director at Norwich-based Dimora Mortgages, Jamie Lennox, said since the short-lived Trussonomics era, demand has been “frankly decimated”. 

He continued: “A lot of people are sitting on their hands and waiting to see how things pan out. Naturally, the run-up to Christmas will temper demand even further, all the more so with the World Cup.

“Many buyers live in fear of previous recessions and are extremely wary that if they buy at the wrong time, they could be left with negative equity. That said, there are a large group of first-time buyers who are hoping for house prices to drop and are waiting for their moment to take a leap onto the property ladder.”

R3 mortgages director Riz Malik said to quote Björk, “the UK housing market is oh, so quiet and oh, so still”.

Despite the “sliver of activity” from first-time buyers, Malik said with the World Cup, alongside miserable weather and a month before everyone shuts down for Christmas, activity levels “are likely to be pretty low”.