The seasonally adjusted HMRC transaction figures for May showed that activity was 27 per cent lower than last year and three per cent down from April.
On a non-seasonally adjusted basis, there were 74,360 residential transactions in May. This was down by a quarter on the same month last year and a 10 per cent increase on the month before.
HMRC said the drop in property transactions compared to last year was due to the higher number of bank holidays in 2023 but also a general decline in the market.
It said that transactions in May had continued on a downward trend following a “marginal increase” in March, then a decline in April.
The rise in transaction levels recorded on a non-seasonal basis was “driven by typical seasonal trends”, HMRC added.
A continuation of low activity
Andy Sommerville, director at Search Acumen, said: “Today’s figures show a continuation of the low transaction levels we have become accustomed to in 2023, with the property market facing significant challenges including rising inflation rates and the high cost of borrowing.”
He said the decline also felt “acute” compared to activity last year.
Nigel Bishop, founder of buying agency Recoco Property Search, said there had been “continuous demand” from house hunters throughout May.
He added: “Despite some economic challenges, such as the recent hike in interest rates, buyers remained motivated to find a property as soon as possible. With a high number of professionals still working from home or splitting their time between home and the office, buyers have been prioritising properties that contribute to a healthy work-life balance.”
Still activity and demand in the market
Vikki Jefferies, propositions director at Primis, said also transaction levels were subdued, they were in line with pre-pandemic activity.
HMRC data showed that transactions in May 2019 came to 97,270.
Jefferies said despite the economic uncertainty, “There is still appetite to lend and plenty of activity in the pipeline, particularly in the remortgaging and specialist lending sectors.”
Gareth Lewis, managing director of MT Finance, added: “Reassuringly, transaction numbers haven’t fallen off a cliff and while there is a slower flow, people are still moving. This is understandable given the considerable factors impacting buyers and homemovers.
“Many people seem to be in a holding pattern with borrowers sitting on their lenders’ standard variable rates in the hope that mortgage rates will come down sooner rather than later.”
Conor Murphy, CEO and founder of Smartr365 and Capricorn Financial Consultancy, said the higher base rate would deter some potential buyers, as indicated by the drop in transactions, but said the housing market was still resilient and the mortgage market would remain strong.
He added: “In fact, with hundreds of thousands of borrowers needing to remortgage during the remainder of 2023, it will be a busy time for brokers and lenders.”
John Phillips, national operations director at Just Mortgages said: “We continue to receive inquiries for new mortgage applications through our brokers nationwide, indicating a persistent demand in the housing market. The prevailing belief among many is that the resilient house prices have upheld confidence in the housing market, reinforcing the intrinsic stability and security of bricks and mortar.
“Although most of the headlines about the housing market are financial, we should remember that people are buying homes and not just houses and that’s what is really important and driving new business.
“We fully expect transactions to increase over the coming months as interest rates fall and inflation reduces the cost-of-living burden.”