Property transactions saw a significant dip in April, with residential property sales reaching their lowest level since October 2021.
The decline has led some in the sector to say that property prices will decline further as a result of the lower demand.
According to the latest statistics from HM Revenue & Customs released today (May 31), property transactions in April were down 29 per cent compared to March on a non-seasonally adjusted basis.
Total residential property transactions for April stood at 67,220 - 32 per cent lower than a year before (April 2022) - on a non-seasonally adjusted basis.
On a seasonally adjusted basis, the total number of transactions for April was down 25 per cent compared to the same month last year and down 8 per cent compared to the previous month, March 2023.
According to HMRC the figures have resumed a downward trend following a small increase in March.
UK residential property transactions by month between April 2020 and April 2023
Source: HM Revenue & Customs
“Transactions were particularly strong in March due to a larger number of working days relative to April and the final month for purchases to complete under the government’s Help To Buy equity loan scheme,” HMRC said.
Responding to today’s figures, Quilter’s mortgage expert Karen Noye said a return to “the buoyant market we had grown accustomed to is not yet on the cards”.
“The spring and summer months typically bring more demand to the housing market but while inflation has finally started its descent, high mortgage rates could continue to put a dampener on transactions as moving home or taking the first step onto the property ladder becomes increasingly unaffordable,” Noye said.
Mortgage turmoil
This week has also seen huge turmoil in the mortgage market as hundreds of lenders pulled rates in order to reprice them.
At the same time, the Bank of England is expected to raise rates further when its monetary policy committee meets again on June 22.
As of earlier this month, the base rate currently sits at 4.5 per cent.
Noye explained that lenders have continued to up their rates in response to this and that they are likely to increase it further should the bank hike rates again.
“However, with a decrease in demand, competition between lenders may keep any rises at a more reasonable pace than the highs witnessed at the end of last year,” she added.
“House prices have been slowly declining in recent months, reflecting the decreased level of demand, and we can expect them to continue falling steadily for a few months yet as sellers compete for buyers.
“For those still keen to move or buy their first home, where possible it may be worth considering a fixed-term deal for two years to make the most of lower predicted rates in 2025,” Noye said.
Likewise, other mortgage professionals said the volatility seen in the mortgage market over the last week, coupled with this dampening of demand could mean further trouble for the housing market.
Mortgage broker Andrew Montlake, managing director of Coreco said: “In recent months, we have seen the market begin to awaken from its prolonged slumber, with buyers returning and getting used to the new mortgage rate environment.
“That, of course, was before the latest inflation figures caused swap rates and therefore mortgage rates to start to increase again.”
“This will undoubtedly have an effect on buyer affordability, mortgage choice, and therefore transaction levels going forward,” Montlake said.
He added: “With many hoping the second quarter would be the start of a new normal market, this now looks like it will be pushed back to the third quarter. If the Bank of England panics and puts rates up much further, this could have a profound effect on the housing market.”
jane.mattews@ft.com
