Property sales fell a quarter in May – and are set for a summer drought

Sarah Coles, head of personal finance at Hargreaves Lansdown, comments on the publication of the latest HMRC property transactions, showing property sales fell a quarter in May – and are set for a summer drought.

Key points from publication:
    • Property sales in May were a quarter (25%) lower than a year earlier, at 74,360.
    • Sales were up 10% from April, but because May is traditionally much busier, after seasonal adjustment sales were 80,020 – down 27% in a year and 3% in a month.
    • Aside from when the market was effectively shut in May 2020, it’s the slowest May in a decade.
Sarah Coles says:

“It was a barren May for the property market, with sales drying up in the face of scorching inflation.

“May’s sales were a quarter lower than a year earlier, and these were agreed months earlier, well before the mortgage rate hikes that are wreaking havoc on the market today.

“It means there’s the risk of a serious sales drought taking hold later in the summer.

“These figures are for sales completed in May, and given that it takes around three months from agreeing a sale to completing, many of them were actually sold in February.

“Back then, it was inflation dominating our every waking thought.

“Buyers were worried that committing to a big mortgage would mean being squeezed harder with each passing month.

“It was enough to encourage plenty of them to sit on their hands, and hope that life got easier.

“In fact, since then, life has got even harder, because we’ve been hit with a new mortgage nightmare.

Back then, Moneyfacts figures show an average two-year fixed rate mortgage cost around 5.3% and a five-year fix around 5%.

“Right now, an average two-year fix will set you back 6.37% and a five-year fix 5.94%.

“It makes the most incredible dent in what people can afford, so buyers either need to make serious compromises about what they can buy, or face sky-high monthly payments at a time when they can ill-afford it.

“Neither of them are a tempting prospect, which is why we can expect property sales to dry up even more as we go through the summer.”

 

Kindly shared by Hargreaves Lansdown

Main article photo courtesy of Pixabay