Last week saw HM Revenue & Customs (HMRC) publish the monthly transaction figures for April. The exact reason for the fall is, however, far from certain.
HMRC’s figures revealed that the number of UK residential property transactions in April was 13.9% lower than April 2021 and 10.5% lower than March 2022, with the number of sales plummeting from 110,990 in March down to 97,970 in April.
Though these figures are representative of deals that had been in the pipeline for some time before April, Today’s Conveyancer set out to illuminate the state of the market and pinpoint why transactions may have fallen.
A poll found that 45% of respondents had seen no recent change in the number of instructions. 26% did note a slight fall – and another 4% a significant fall – though 26% went as far as to say there had been an increase in instructions. This suggests that, on balance, instructions have stayed relatively consistent of late.
The picture painted by a poll on the number of fall-throughs is more conspicuous. 56% of respondents reported no change, yet a striking 44% said they had seen a slight rise in fall-throughs. That said, nobody told of a significant fall – though nobody experienced a decline in fall-throughs, either.
Helen Hutchison, Residential Property Partner at Irwin Mitchell, outlined her views on the cause of the fall in transactions:
“Although these figures may cause some concern, it is important to understand that this relates to the number of completions and would be reflective of the market some months ago.
There are many factors which could contribute to the figures we are seeing. The cost of living crisis and the potential for an increase in interest rates are undoubtedly matters which would concern home buyers when making large investments. Nonetheless, this is balanced by low unemployment levels and accidental savers during the pandemic, who are now ready to purchase.
Uncertainty about work from home arrangements may have prevented some people from moving out of the commuter belt, but as remote and hybrid working becomes permanently adopted, there appears to be plenty of people still looking to move. This is evident from the lack of stock, which in turn has seen property prices continue to increase. However, first-time buyers may be struggling against these high price increases, together with a lack of low LTV products on the market. If first-time buyers are becoming rare, then this may have an impact on the rest of the chains and slow the market down.
Personally, I am still seeing plenty of enquiries and instructions coming through. The figures from HMRC may show a steadying market after the particularly busy few years, but from my perspective the market is not seeing the major halt some expected following the end of the SDLT holiday.”
Peter Ambrose, Managing Director of property law firm The Partnership, noted a fall in instructions during April, something that was unexpected given the trend of recent years:
“Once again, the property market continues to confound us. In all previous years, we see a run up of new instructions from January all the way through to May, in a reasonably stable line. This year, however, it’s been different, with a much steeper rise in new instructions from the very start of the year, which then peaked and started to come down in April.”
Despite this, Ambrose noted two positive indicators within the market: cancellation rates and transaction times have both fallen:
“On the positive side of things, we are seeing a continuing trend in two areas. Firstly, cancellation rates continue their decline from December from the giddy heights of 23% – which was the highest we’d seen it for many years – down to 7% of live transactions on April. This is linked to a significant reduction in transaction times down from the peak in February when it was around 16.5 weeks, down approximately 14 weeks in April. Both of these are very positive indicators.
I should point out that our transactions are mostly in London and the South East, so this may have a bearing on these figures.”
Rob Hailstone, CEO of Bold Legal Group, commented:
“It isn’t really surprising that transaction numbers appear to be falling. What is surprising is that after two-and-a-bit years of a very busy market, it has taken this long. Prices are high, stock (according to estate agents) is low, interest rates are on the up and Putin is still warmongering. Thankfully though, there are still no signs if a market crash. However, girding one’s loins and preparing for a drop is probably the sensible thing to do.”
