UK home sales fall as property market cools

House prices: Sales last month were down 12.1% from April 2021. Photo: Getty

Britain’s property market boom is showing signs of slowing as house sales fell slightly in April, with experts warning mortgage prices could rise and deter first-time buyers amid rising inflation.

Figures from HM Revenue and Customs (HMRC) show there were 106,780 transactions last month, down 3.9% from March.

Seasonally adjusted sales last month were 12.1% lower than in April 2021, when the stamp duty holiday was still in full swing.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “The dizzying peaks and troughs in home sales have started to level off, and while still at a higher altitude than before the pandemic, this raises the question of whether we are heading for lower ground as the market begins to slow.”

However, despite the drop in sales, transactions were ahead ofcovid levels in 2018 and 2019, suggesting the market remains overfed despite inflationary pressures.

“A fall in property transactions will not come as a shock as the whole of the UK faces 40-year-old high rates of inflation and a cost of living crisis“, said Chris Hutcinson, CEO of Canopy. “It’s no wonder that adults are struggling to prepare to buy property as they adapt their spending habits, while ensuring a good level of financial health .”

Read more: UK property prices hit new high as mortgages outpace rents

He warned that mortgage prices “will continue to rise and drive potential first-time buyers” out of the market as inflation rates are expected to hit double digits later this year.

Stuart Wilson, CEO of Air Group, said: “The mood music around the property market has certainly changed over the past week, with speculation swirling around a drop in activity and average house prices. real estate as the cost of living crisis continues.

“April brought hikes in energy price caps, National Insurance contributions and municipal tax bills – all three of which likely saw people tighten their belts and derail their future buying plans.

“However, with the property market having seen strong growth in recent years – partly thanks to the stamp duty exemption – older homeowners have wealth tied up in their property to fall back on.”

Separate analysis suggests asking prices for UK properties hit a new record high for a fourth consecutive month, although there are signs the market is starting to ease.

Read more: House prices double around new Elizabeth Line stations

Move right (RMV.L) said the price sought by sellers when homes come on the market rose 2.1% in May to a record high of £367,501. This marks a jump of £55,551 since the housing market shut down at the start of the pandemic, almost 10 times the increase of £6,218 in the previous two years.

The fourth consecutive interest rate hike by the Bank of England to curb inflation has cost mortgage holders, who are now paying more than renters.

In May, average monthly mortgage payments of £901 exceeded the cost of rent, which stood at £887, according to Rightmove.

Watch: Will UK house prices ever drop?

Penny D. Jackson