UK property sales fall off the cliff edge
The UK residential property market still has yet to hit rock bottom
UK residential house sales have been tumbling for the past 12 months down 14%, and in the past two months have fallen off the cliff edge.
Comparing the figures with the same month from a year ago, the number of transactions for May 2023 are down 25% (25,400 less sales) from where they were in May 2022, starker was the position for April 2023 which was even worse with a drop of 32% (31,840 fewer transactions).
Paul Haywood-Schiefer, Senior Manager said: “It would be easy to say that this is just a return to the mean with the last couple of years of the market being pretty high on transactions because of the government’s Stamp Duty Land Tax (SDLT) holiday. However, the transactions pre Covid for April and May (2019) were still 23% higher in both months than the 2023 figures (87,860 and 97,050 transactions accordingly).
“Therefore, there really isn’t a lot in that argument. What we have here is that purchasing a house is not a priority whilst people focus on covering the costs of the essentials, as inflation runs rife and interest rate rises being largely ineffectual to curb it.”
He added: “The government’s SDLT holiday itself was unnecessary at the time given the context that people were inevitably going to look for changes to their living conditions having been confined to their properties during lockdown. All it did was create a frenzy as people thought they needed to be part of it. This pushed prices up meaning no real saving to buyers, and that money went to the sellers who in turn were probably paying more for the house they subsequently bought. This meant that many buyers ‘pushed the boat out’ leaving themselves highly geared. They’ll now be coming up to the end of low fixed interest rate mortgages, sitting wondering what interest rate they will get and how they are going to be able to make these payments.”
“So, in effect, we are now in a position where house sales are falling off a cliff, and if families have to sell because they can’t deal with the interest rate rises, many might find themselves in a position of negative equity. Homeowners are finding themselves stuck between the decision of trying to hold on to their properties paying higher mortgage payments or putting their property on the market and cutting their losses.”
“It’s hard to see any changes in this current downward spiral whilst interest rates continue to increase, and we’d expect the market hasn’t hit rock bottom yet.