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UK property sales fall 19% annually but is there hope of a spring bounce?

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Written by: Shekina Tuahene
28/04/2023
Residential property sales in the UK fell 19% from the same period last year however, there was some respite for the beleaguered market with a monthly increase from February to March.

According to figures from HMRC, on a seasonally-adjusted basis, there were 89,560 transactions in March. This left property sales 19% down on the same month last year. Meanwhile, compared to pre-pandemic levels, this was 8.2% down on the 97,550 seasonally adjusted transactions in March 2019. 

HMRC also pointed out that transactions for the year-to-date were “significantly lower” than last year, but noted that activity at the time was boosted by pent-up demand and the stamp duty holiday. 

Spring boost?

However, despite the annual fall, there was a glimmer of hope in the market, with a month-on-month uptick of 1%, which broke the trend of declines seen in previous months, such as the 4% monthly decline in February and a 3% dip between December and January. 

Danny Belton, head of lender relationships at Legal and General Mortgage Club, said it was “positive to see an uptick in transactions from February to March kickstarting a strong spring selling season”.

Sarah Coles, head of personal finance, at Hargreaves Lansdown highlighted that while there’d been a definite ‘bump’ at the start of spring, it was hardly ‘spectacular’.

She said: “We saw a bump in the number of property sales in March, as thousands of buyers bought into the usual flurry at the start of spring. However, this wasn’t a spectacular bounce. There are some positives in the numbers, but nothing to bet the house on.

“There’s some hope to be gleaned from the fact that even in this market, spring is working some of its magic. It means homeowners with well-priced properties stand a decent chance of selling. We also know that mortgage approvals for the coming months rose in February, so it could mean there’s some hope for April too.”

A temporary reprieve?

However, Karen Noye, mortgage expert at Quilter, noted that while the monthly uplift could be a sign of cautious optimism in the market, any upward movement on the base rate by the Bank of England would swiftly put an end to any hopes of continued recovery.

She said: “While a slight uptick may at first glance appear to be the start of a return to a more buoyant market, interest rates hikes are yet to be put on pause. If the Bank of England opts to increase them again at the MPC meeting in May, we could see a further dip in transactions as more pressure is placed on people’s finances.

“Mortgage rates are expected to fall throughout the year, but if inflation remains sticky and the Bank of England opts to hike rates, we could see some lenders increase their mortgage rates once more. However, competition between lenders will likely keep any rises much lower than the highs witnessed at the end of last year.”

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