The number of house sales are returning to pre-COVID levels
The number of sales agreed between sellers and buyers was just 1% lower in March when compared to the same month in 2019, according to Rightmove.
While the data from the property website appeared encouraging, Joshua Raymond, director of online investment platform XTB, said it did not necessarily herald the return of a price surge for the UK housing market.
“When comparing the recent data to figures after COVID, which saw a boost in demand, as buyers sought larger properties and living spaces from the move to flexible working, the number of sales remain close to 20% lower,” said Raymond (pictured left).
He added that with flexible working remaining in full vigour, this was a better like for like comparison, and so activity had simply not returned yet.
The core reasons behind this, he added, continued to be higher mortgage costs which impacted buyer demand and consequently a lack of supply, which affected the number of potential sales.
Nevertheless, Raymond said there were positive signs that sales could rebound stronger over the course of the next two years, as the UK economy emerged from the cost-of-living crisis.
“UK inflation is expected to return to levels closer to 3% by the end of 2023, which will have a tangible impact on consumer spending,” he declared.
Moreover, with inflation falling sharply, Raymond believed we could expect UK interest rates to be close to peaking, which would help stabilise mortgage rates and offers.
“Much will now depend on the strength of the UK economy and its ability to recover from post pandemic fragility,” Raymond said.
Whilst it was expected the UK economy would escape a recession in 2023, he said it was still likely to perform worse than most nations in the G7 in 2024.
Raymond believed this might raise the possibility of an interest rate cut in 2024, which could spur higher activity in the UK housing market.
Finding balance
Meanwhile, Nick Leeming (pictured right), chairman of estate agent Jackson-Stops, said transaction volumes were steadying and indicated an end to the days of erratic swings in completions.
Leeming said the past two years had been marked by policy changes, economic volatility, and unserviceable levels of buyer demand, whereas now the market appeared to be finding its balance.
“House prices are also finding their new balance, which has given broader opportunities to would-be buyers, and will be key to keeping transactions buoyed in the coming months,” he said.
Leeming believed the economic picture had become much more stable over recent months. Broadly speaking, he thought any incremental rate rise was unlikely to drive significant change to current transaction levels and property sales.
“The property market is determined to a much greater extent by current mortgage rates which have also seen a high level of change since the final quarter of 2022,” Leeming added.
Leeming thought the most important thing that the market could do to keep transactions moving was for there to be a proper balance between supply and demand.
“Across the Jackson-Stops national network, we are seeing strong interest from buyers in commuter markets such as Midhurst, Tunbridge Wells, Reigate, and Chelmsford, with prospective buyers exceeding new instructions by at least 40%,” he said.
While the position varied across different parts of the country, Leeming said the market was now more in line with pre-pandemic levels as the industry moved into a traditionally busier period for the market.
Have you seen the number of house sales returning to pre-pandemic levels? Let us know in the comment section below.
