UK Property sales experienced a significant drop in April, falling by 29% from the previous month, according to non-seasonally adjusted figures. The number of sales was 67,220, marking a 32% decrease compared to the same month last year. Even when seasonally adjusted, the sales figures show a stark decline, standing at 82,120, which is 8% lower than March and 25% below the numbers recorded a year earlier. The downward trend in property sales has not been this pronounced since October 2021. This paints a grim picture as it marks the worst April performance in a decade, with the exception of the onset of the pandemic.
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, reflected on the alarming sales figures. She stated, “March was a blip, driven by the final month to capitalise on the Help to Buy equity loan scheme. Once that window closed, sales dropped like a stone. It’s possible that we have not seen the end of the bad news.”
Coles pointed out the continuation of a dismal trend in the market since the start of 2023, with a bleak January, an even worse February, a brief respite in March, followed by a return to a downward spiral in April.
Coles suggested that the upcoming early summer figures may not be as alarming due to the rise in mortgage approvals in February and March. Zoopla’s data suggests that sales agreed in May were 11% above the five-year average. “Admittedly, demand remains much lower than average, and the Royal Institution of Chartered Surveyors (RICS) has been documenting a consistent decrease in new demand for several months. Yet, there are reasons to remain optimistic that the decline will level off,” she said.
However, she warned that sales later in the summer would reflect the current market condition, which appears to be quite grim. The rise in core inflation, as revealed in the May data, has led the market to anticipate rate rises to around 5.5%. She acknowledged that there might be an overreaction to this, and further evidence of a global slowdown could reduce the swaps market’s momentum and bring these expectations down. Nonetheless, this resulted in 7% of mortgages being withdrawn and an overall re-pricing that pushed rates up.
Coles speculated that in the upcoming weeks, if news about inflation and the economy cools down the rate expectations, the situation might improve slightly. However, she warned that it might take some time for mortgage rates to decrease again, causing disruption in the market in the meantime. “If more discouraging news about the economy surfaces, it could convince people to delay their purchases, making it a challenging summer for the property market,” she concluded.
HMRC published monthly property sales for April: Monthly property transactions completed in the UK with value of £40,000 or above – GOV.UK (www.gov.uk)
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