Property sales fall by 50%

(Last Updated: 18/09/2023)
7 min read

Average House Price London (June)


Sales Volume London (April)


Average House Price England & Wales (June)


Sales Volume England & Wales (April)

Key Takeaways for August 2023
  • Property sales fall by 50% year on year
  • House prices remain close to record highs in England and Wales
  • Bank of England maintains base rate
  • Property Mark report "The supply of new homes up for sale increased to 10 per branch in July"
  • Mortgage approvals for home buyers down 22% YOY and 10% MOM
  • New build completions down 8% YOY

The Bank of England are yet to meet in September, however early indications suggest that the base rate won't reach the 5.75-6% financial experts previously suggested. The Bank of England's chief economist Huw Pill has indicated he is likely to vote to keep interest rates at their current rate for a long period rather than raising them further. As flagged in our July 2023 report, 5% has always been the normal rate, the 0.1% we have grown used to over recent years was abnormally low.

The property market needs the stability of a base rate that doesn't keep shifting up because the number of property transactions this year are expected to fall to the lowest level since 2012, according to Zoopla. While sales of smaller homes have not fallen much this year, sales of three and four-bed homes were down 40 per cent last month, compared with the same month, over the previous five years. House sales are expected to total one million this year, well below the long-running 1.26 million average.

According to Zoopla, buyers are more likely to wait until the outlook for mortgage rates becomes more favourable, despite property prices falling in some parts of the UK. I expect to see this from January onward. Because, whilst Mr Pill states he will likely vote to keep interest rates at their current levels, inflation remains higher than the target 2% because of the fuel price blip. The chancellor Jeremy Hunt has said the UK may experience a “blip” increase in inflation when the latest figures for August are published this month, because of the impact of rising fuel costs.

What our survey revealed about homebuyers
Our survey, conducted by YouGov, reveals the top challenges faced homeowners when buying their most recent property, plus the true costs of defects when skipping a home buyers survey.

What are homebuyers looking for?

Why do falling house prices matter?

House prices aren't falling as fast as sales volume. However, it is estimated 50,000 UK homeowners have fallen into negative equity in the last year, according to The National Institute of Economic and Social Research. Whilst negative equity isn't a challenge if you don't need to sell or remortgage, most of those will face challenges if their mortgage fixed term expires and they are forced to pay the mortgage lender's variable rate.

Will the BOE base rate go any higher?

The base rate will increase to 5.5% on Thursday 21st September, says Andrew Boast FMAAT

Whilst the Bank of England have indicated rates may not increase, it is likely the fuel blip will cause inflation to remain higher than needed for the base rate to stay at 5.25%. I predict that base rate will increase to 5.5% on the 21st September and then remain at this level over the Christmas period.

Source: Office for National Statistics (ONS)

Sales volume lowest ever in London

London Property sales fall by 50%. A Cartoon of a man trying to hold up the property market with ropes

London has the lowest volume of sales for the month of April since records began. April is often one of the strongest months for completions because it is linked to the Easter holidays offering a longer weekend to get unpacked and moved in. Back in April 2004 sales reached an all time high of 14,873 with an average sale price of £225,863. 19 years on, sale volumes have slumped to 3,194 with an average sale price of £527,979 - only £16,000 off the all time record high for any month.

Source: House Price Index (HPI)

England & Wales

England and Wales echoes London with a 50% fall year on year for April. The lack of affordable mortgage products, followed by a fall in available properties and the overall uncertainty in the housing market is going to cause the market to slow down. Buyers will be thinking why get a 6%+ mortgage rate this year when you can get a 4-5% deal in the Spring.

Source: House Price Index (HPI)

Are house prices actually falling?

The Halifax house price index shows that house prices are falling at their fastest rate since the financial crisis in 2007-8 and have hit their lowest level in real terms since 2016. They write further stating annual prices in August dropped 4.6 per cent with higher interest rates weighing on the property market; prices have fallen for five consecutive months (Financial Times).

The reason for this fall could be linked to prospective buyers delaying purchasing in the hope of greater stability and clarity on the direction of rates in the coming months of September to November.

I prefer the overall data provided by the Land Registry and the latest data for June 2023 shows house prices in England and Wales are up 2% year on year and only down 1% in London. The housing market isn't waiting for house prices to drop, it is waiting for stability with mortgage rates and more housing stock.

The solution to the stagnating housing market is more properties for sale, NOT cheap mortgages

It could take years for the market to re-start with homeowners confident to sell and upsize/downsize. The UK’s biggest housebuilder, Barratt Developments, has warned it will take two years for the country’s property market to recover. Until then I expect to see low sales volumes, where those who can afford to will sit tight and wait out the the high interest rates. For those who can't afford to wait, distressed sales for under market value will creep in and cause slight decreases in the average house prices.

Source: House Price Index (HPI)

Mortgage approvals rally

Bank of England data shows that mortgage lending for purchases has fallen YOY by 22% for July 2023. This is unsurprising considering the base rate increases and the volatility of the housing market. Purchasers are looking for better deals; falling house prices or lower mortgage rates.

At SAM Conveyancing we have clients telling us that they can only afford to buy on the mortgage rate they secured in April, they'd not be able to buy their property based on the current rates with the same lender. This is why it is so important that you never let your mortgage offer expire and lose your rate. If this is happening to you read our article - What happens if my mortgage offer expires?

What about the remortgage market?

The number of remortgages has remained the same, month on month, for July 2023, however they have fallen 20% year on year. Are home owners waiting for better rates, or are they trapped in properties they can't afford to remortgage?

Source: Bank of England

Housing supply never meets demand

The government have stated, for the last 10 years, that we need 300,000 new homes to meet with the demand. However, as you can see below, the target has been continually unmet by developers and local authorities. The shortage of housing inflates house prices because without enough fresh housing stock and with not enough home owners selling, the competition for available properties keeps the average house price higher; especially for new builds where you pay a premium (just like buying a new car).

Source: Gov.UK

Andrew Boast FMAAT MIC
CEO and Author | SAM Conveyancing

As predicted in July's report, August and September will get worse before they get better as home owners who don't have to move will sit tight and weather the storm of high interest rates and poor housing stock.

The housing market needs fresh housing stock, but the volume of new builds is falling in 2023. So with no new builds, we must wait for sellers to be confident they can upsize/downsize in 2024 for this market to start moving again.

For now buyers will have to wait until the Bank of England base rate stops its monthly increases giving mortgage lenders greater confidence to offer more mortgage products, to make buying more affordable.

The silver lining for buyers is that you may be able to find a seller willing to reduce their house price by a larger amount than normal because of circumstances meaning the seller can't afford not to sell. If you're entering into negotiations then here is a very useful guide on - How to negotiate when buying a house.

Sources: Latest data from - Bank of England, UK House Price Index, ONS and Property Mark (NAEA).

Andrew Boast of Sam Conveyancing
Written by:
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Caragh Bailey, Digital Marketing
Reviewed by:
Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey and mortgage related articles.
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