New data from HM Revenue & Customs has revealed the number of UK residential property transactions in April 2023 was 32% lower than the same month in 2022.
Indeed, the 67,220 transactions seen last month was also 29% lower than the previous month of March 2023 on a non-seasonally adjusted basis.
Looking at the same data on a seasonally adjusted basis, HMRC said transactions were down 25% year-on-year and 8% month-on-month.
Despite this, commentators have suggested the UK property market is proving “more resilient than anticipated” amidst the new borrowing landscape. Kevin Roberts, Managing Director, Legal & General Mortgage Services, said:
“Following the slight uptick in property transactions in March, today’s data similarly suggests that buyers and sellers are steadily returning to the market. Although transaction figures no longer resemble the highs we saw during the pandemic, activity is still proving to be much more resilient than we had anticipated.
After almost a decade of ultra-low interest rates, buyers are still adjusting to a new borrowing landscape. Innovative new products are helping to meet buyers’ changing needs, but they’re also adding new levels of complexity.”
However, Karen Noye, mortgage expert at Quilter, was less optimistic:
“While the economic path is starting to look a little more predictable and we had seen an uptick in transactions in March, April’s figures show 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.
The Bank of England hiked its base rate to 4.5% in May and it is not expected to stop there. Lenders have continued to up their mortgage rates in response, and they are likely to increase 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.”
“March was a blip, driven by the fact it was the final month to take advantage of the Help to Buy equity loan scheme. Once the window closed, sales dropped like a stone. And this may not be the end of the bad news,” said Sarah Coles, head of personal finance, Hargreaves Lansdown, offering a similar sentiment to Noye. Coles added:
“When you take the blip out of the figures, April’s decline is a continuation of the miserable trend we’ve seen since the beginning of 2023. We had a shocking January, a worse February, and after a brief hiatus in March, April saw us revert to the downward path again.”
However, on a more positive note, Coles said:
“The figures for early summer may not be too hideous, given that mortgage approvals had risen in February and March. Zoopla also says sales agreed in May were 11% above the five-year average. Admittedly, demand remains far lower than average, and RICS has been charting a steady drop in new demand for months. However, there’s reason to hope we’ll see the decline level off.
However, sales later in the summer will reflect what’s happening in the market right now, which may not be pretty.”
