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Bleak News from the UK Property Market

We look at the weakness of the UK property market and if the position will improve in the coming months

HMRC’s provisional estimates for UK residential property transactions for the month of April 2023 have been released today and paint a bleak picture for the UK property market.

Sean Randall,  stamp duty expert and property tax partner said: “The numbers are the worst figures for a month in over 10 years (aside from the two lockdown months of April and May 2020, when the market was closed to all but those who were already in the process of completing).”

He added: “HMRC estimate that only 67,220 UK residential property transactions took place last month. This is 32% lower than April 2022 and 41% lower than April 2021. Showing a sharp downward trend in the number of people purchasing properties. The number of transactions has been steadily declining since November last year with only a brief respite in March.”

Sean said: “The last time the number of property transactions in a month was lower was May 2020 when the country was in the height of lockdown. You would then need to go back over 10 years to February 2013 to find the next month with lower transactions than 67,220. February itself being notoriously bad for transactions due to being a short month and straight after Christmas.”

Moreover, Sean does not believe the position will improve in the coming months.

He explains: “Back in 2013 the Bank of England interest rate was at 0.5% which enabled property transactions to pick up. However, currently the interest rate sits at 4.5% and is expected to continue rising, this coupled with high inflation at 8.7% increasing the cost of living (meaning people have less disposable income to save for a property), makes it difficult to see the downward trend reversing for some time. The stagnating property market may lead to a fall in house prices, placing millions of post-Covid house buyers into negative equity and effectively preventing homeowners from selling and continuing the period of low property transactions.

“In summary, it appears that the decades of high property value growth are over and that a property crisis is looming. Will the Bank of England delay any future interest rate rises to try to rescue the market or is a property market crash a risk they are willing to take?”

UK Residential Property Transactions above £40,000

                              2020/21            2021/22            2022/23

May                       46,160                 102,980                  99,760

June                       67,430                 214,540               103,840

July                        80,660                 83,520                 110,030

Aug                        85,050                 104,320               112,950

Sept                       99,070                 165,730               114,740

Oct                         121,740               85,890                 109,960

Nov                        121,180               101,880               112,350

Dec                         132,900               110,220               107,430

Jan                         97,810                 83,620                 75,630

Feb                         121,260               94,090                 75,240

Mar                        174,080               109,760               95,000

Apr                         113,790               99,520                 67,220

Total                      1,261,130           1,356,070           1,184,150


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