UK residential sales decrease by approximately 25% in 2023.
According to recent data from HMRC, home transactions in the UK have decreased by 27% over the previous year.
May 2023 saw 80,020 transactions, which is 3% fewer than April’s total.
In the meantime, there were 9,460 non-residential transactions in the UK in May, which is 16% fewer than it was during the same month last year.
But the decrease from April to May was only down by less than 1%.
The findings, according to brokers, are a result of a combination of higher swap rates, higher interest rates, and sharply rising inflation.
Jeremy Leaf, a real estate agent in North London and a past chairman of the RICS Residential Committee, asserts: “Transactions always offer a more accurate representation of market health than property prices.
Fewer buyers and longer negotiations as a result of the mortgage crisis and inflation worries are leading to fewer deals.
“Transaction numbers continue to come under pressure in the face of higher interest rates and the cost of living,” says Mark Harris, chief executive of SPF Private Client.
“Swap rates, which determine how much fixed-rate mortgages cost, are still rising.
Because of this, lenders are still raising their fixed rates. As a result, borrowers who are considering refinancing or searching for a new contract would be advised to consult a broker and think about locking in a rate as soon as possible.
“Reassuringly, transaction numbers haven’t fallen off a cliff and while there is a slower flow, people are still moving,” says Gareth Lewis, managing director of property lender MT Finance.
“Given the significant factors affecting homebuyers and homemovers, this slowdown is understandable.
Additionally, brokers are reporting that many consumers appear to be in a holding pattern and are continuing to pay the usual variable rates set by their lenders in the hopes that mortgage rates will decline as soon as possible.
The industry “needs a sharp end to sticky inflation,” according to the provider of property data analytics and technology Search Acumen.
The numbers “show a continuation of the low transaction levels we have become accustomed to in 2023,” according to director Andy Sommerville.
“Debt continues to be a key driver in transaction volumes in financially difficult times,” the author continues.
To ensure market stability for the remainder of the year, the sector needs a swift halt to sticky inflation.
The results “reflected the overall slowdown in the housing market,” according to Simon Webb, managing director of capital markets and finance at LiveMore.
More houses are available for sale in the market, but there are fewer purchasers, as evidenced by declining property prices from the highs of a year ago, the expert continues.
John Phillips, national operations director at Just Mortgages, comments: “Following an unexpectedly good March, the slowdown from April has carried over into May.
“The property market is changing, and many people are disappointed that interest rates increased this month by another 0.5% to 5%.
As interest rates decline and the cost of living decreases due to inflation, we fully anticipate an increase in transactions over the upcoming months.