"The regions experiencing the most significant drops in sold properties are also the regions with the highest average house prices - highlighting greater market stability in areas with a higher number of lower-priced properties"
- Heather Staff - Street
New research from Street.co.uk reveals that residential property sales in England and Wales are down by 12% over the last quarter, while sales have also significantly declined by 15% (July-September 2023).
Over the last two years, there has been a sharp decline in total sales agreed (27%), with January - September 2023 recording 741,148, while in the same period (January-September) of 2021, the sales agreed figure was 1,021,997.
Market analysis reveals that the decline in property sales across the country is not evenly distributed and is disproportionately affecting the East Midlands which has experienced the most substantial drop in sales, followed closely by the South East.
Greater London has not been immune to these shifts. In August, the region saw a 6% decline in sales and a 16% drop in listings. This decline in both sales agreed and listings have contributed to a challenging environment within the capital, which is markedly more pronounced than in other regions.
In contrast, the North East and North West regions have shown the smallest decline in sales agreed, with reductions of only 12% and 13%, respectively. This suggests a notable North-South divide in sales performance.
Looking into potential reasons for the decline in sales agreed, the size of properties has played a role in this shift, with a more modest decline in sales observed for one, and two-bedroom properties compared to larger residences, with four or five bedrooms. This data hints at a reduced demand for larger and typically higher-priced properties, likely driven by mid-sized homeowners downsizing and first-time buyers facing affordability constraints.
Sales agreed are expected to be 15% below the five-year average next quarter, likely ending the year not too dissimilar to the performance seen throughout the year - slow but stable. It is worth noting though that agreed sales are forecast to finish above Q4 2022.
Heather Staff, Co-Founder of Street.co.uk, comments: “The regions experiencing the most significant drops in sold properties are also the regions with the highest average house prices - highlighting greater market stability in areas with a higher number of lower-priced properties.
“Higher mortgage rates appear to have a more pronounced effect on buying power in the South, where house prices are highest. As budgets are squeezed, mortgage costs rise and savings diminish, buyers in high-value regions face greater challenges. In contrast, lower-value housing markets in regions like the North East and North West are faring better under these conditions, where buyer’s budgets can go further.
“The recent decision to maintain the base rate at 5.25% should provide some added comfort as we move into the final quarter for agents and home movers alike. It is expected lenders will further reduce their rates in light of this news in an effort to remain competitive. This will come as a relief for current first-time buyers and those on tracker mortgages and could have a positive impact on sales completing.
Heather adds: “However, the Bank of England also stated housing remains one of the signs of weakness in the economy with investment down 7.7% year on year and falls in both prices and transactions. The pause in increasing the base rate has provided a much-needed break for the industry, allowing time for some confidence to return.
“The effects aren't likely to be immediate and seasonality will likely dictate the direction of sales agreed for the rest of the year, but we might see a rise in new listings as optimistic sellers look towards home moving in the New Year.”
