Tumbling house sales show tentative signs of bottoming out

Linda J. Dodson

Property sales continued to tumble in May and remained well below the level seen in the worst months of the financial crisis.

There were 48,450 residential sales in Britain last month, half the number seen in May 2019, according to HMRC’s provisional seasonally adjusted estimate.

The drop follows a 57pc year-on-year fall in transactions in April, when the housing market freeze, which began on March 27, started to hit the statistics.

It is likely that the May estimate will be revised down further. Housing analysts BuiltPlace noted that the initial April estimate of 46,440 was downgraded to 41,760.

However, the data suggest a degree of recovery as the number of sales in May was 16pc higher than in the previous month.

The boost has been led by the English housing market, which was given the green light to restart on May 13, while the Scottish, Welsh and Northern Irish markets remained shut.

In England there were 40,600 sales in May, a 26pc increase on the previous month but still the lowest level recorded since February 2009.

Meanwhile, in Northern Ireland, there were just 530 sales – roughly a fifth of the number seen in May 2019.

The uptick in English sales has been led by a flurry of completions as transactions that were suspended during lockdown were finally able to complete in May.

Agents have also reported a boom in fresh sales since the English housing market reopened as pent-up demand and a new desire to move after lockdown flooded the market. 

The number of newly agreed sales (which will appear in HMRC’s completed sales data for June) has now recovered to pre-coronavirus levels, according to property website Zoopla.

The same is expected to happen in Wales, which reopened its property market on June 22, and in Scotland, which is due to ease restrictions on June 29.

Analysts have cautioned that any recovery will be tempered by the economic downturn brought by the virus, the full effects of which will not be felt in the housing market until the furlough scheme and mortgage holidays end in the autumn.

Hansen Lu, of research firm Capital Economics, said: “Looking ahead, data from property portals show a surge in buyer interest. So transactions in June should strengthen further. But with unemployment rising and a large share of the population still furloughed, we expect those gains to be modest.”

Jeremy Leaf, a north London estate agent, added: “We have concerns that most of the demand is for smaller family houses rather than smaller flats as aspiring first-time buyers remain concerned over future employment prospects post-furlough.”

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