Recent data reveals a significant decline in property transactions across the UK, presenting potential opportunities for astute investors looking to capitalize on a declining market. House Buyer Bureau, a bulk-purchase company, conducted an analysis of monthly transaction levels since the Bank of England initiated a series of consecutive base rate hikes in December 2021. The research highlights a notable drop in market activity in terms of total monthly transactions and average monthly changes.Â
In February 2023, Britain witnessed only 43,209 transactions, representing a decrease of 45.2% compared to December 2021. The decline became more pronounced this year, with sales volumes in January (44,635) and February 2023 (43,209) plummeting by 27.9% and 37.0%, respectively, compared to the corresponding months in 2022.
Consequently, the average monthly transaction levels have experienced a decline of 3.4% since December 2021, primarily observed in recent months. Wales has witnessed the most significant decrease in market activity, with a notable 51.5% reduction in total monthly sales, translating to only 2,001 property transfers in February 2023 compared to 4,122 in December 2021. Similarly, the East of England (down 48.1%) and the East Midlands (down 47.3%) also saw substantial declines.
In comparison, Scotland has experienced the smallest reduction in transaction levels, although the 5,365 homes sold in February 2023 still represent a 39.9% decrease from the December 2021 figure.
A spokesperson from the House Buyer Bureau remarks, “A sense of pessimism is permeating throughout the UK, with elevated mortgage rates dampening people’s aspirations to purchase property. While certain regions have been hit harder than others, it is evident that every segment of the market is grappling with the current climate. The combination of soaring energy costs, high inflation, and increasing mortgage expenses has diminished affordability and shaken confidence across the board.”
“In the present circumstances, cash buyers emerge as the potential victors due to reduced competition from mortgage-dependent homebuyers. This advantageous position allows them to negotiate more favorably for purchase prices.
As for the rest of us, we can only hope that the Bank’s successive base rate increases achieve their intended objective of reining in inflation and bringing it closer to the targeted two percent. Until this goal is realized, it remains challenging to anticipate the extent to which the base rate, and consequently mortgage rates, may rise.”
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