The figures released by HMRC showed a continued trend of purchase demand in spite of the collateral caused by the pandemic, Ukraine war, rise in living costs and inflation.

The non-seasonally adjusted estimate of UK residential transactions in March 2022 was 110,990, which is 18.2% higher than February, but 36.2% lower than March last year.

The adjusted 2021/2022 annual estimate currently stands at 1,374,050 residential transactions.

However, HMRC warned that the figures should be treated with a pinch of salt due to “significant forestalling observed in March 2021” in both land and buildings transaction tax (LBTT), and stamp duty (SDLT), as the stamp duty tax break and its various amendments caused spikes in activity throughout 2021.

The body attributed this forestalling to transactions scheduled to complete prior to the 3 March 2021 Budget announcement as there was a rush to complete around the deadlines with a record 178,320 adjusted transactions.

It also observed “significant uncertainties” due to the pandemic and the impact of lockdowns on the property market, which has been affecting seasonal trends since April 2020.

A return to stability in spite of complications

Mark Harris, chief executive of SPF Private Clients, said: “Demand for mortgages is strong as rates remain competitive, even as swap rates continue to rise.

“Some heat has come out of the purchase market compared with this time last year which is welcome as that frenetic pace could not continue. Remortgaging activity is strong as borrowers attempt to lock into low mortgage rates before they disappear.”

Tomer Aboody, director of MT Finance, said the higher transactional volumes in March compared with February could be “the turning point when the market finally gets some stability and pricing normalises.”

He continued: “Volumes are much lower than March 2021, which is the reason why there has been such a significant increase in property values. The difference last year was that the stamp duty break encouraged many would-be sellers to get on and sell, suggesting that a revamp of stamp duty is needed to stimulate activity in the market.”

‘Significant headwinds coming’

Helen Morrissey of Hargreaves Lansdown, said: “The UK property market remains buoyant with soaring prices and the cost-of-living squeeze yet to dampen people’s appetite for new homes. Comparisons with last year are tricky with the stamp duty holiday and the pandemic race for space causing a huge surge in activity but while the number of transactions is down on this time last year, it is still a massive 18% up on last month’s figure. Provisional figures for the 2021/22 tax year also show the highest financial year total since the pre-Financial Crisis property boom.

“How long the market can maintain this momentum remains to be seen as there are significant headwinds incoming. Sellers may be keen to put their homes on the market to capitalise on rising prices, but they may find there is less interest in the coming months with interest rates pushing up mortgage rates and people increasingly tightening their belts to deal with soaring bills. With more interest rate increases on the horizon and inflation showing no sign of letting up, the coming months could show would-be buyers looking to shelve potential home purchases until the financial outlook settles down.”