According to recent data, property transactions fell by 64 per cent from March to April following the return of higher Stamp Duty charges on April 1st, marking the largest month-on-month decline since records began.
Despite this dramatic drop, underlying market conditions remain supportive for homebuyers according to a report from Fine & Country.
The Bank of England lowered its base rate by 25 basis points in May to 4.25 per cent, providing some relief for borrowers.
However, inflation has since risen to 3.5 per cent in the 12 months to April, up from 2.6 per cent in March, primarily due to increases in household bills.
Market experts note that strong fundamentals are supporting continued activity in the housing sector.
Low unemployment rates, rising real earnings, and expectations of further easing in borrowing costs are maintaining buyer confidence despite the recent transaction dip.
“Forty per cent of agents reported transaction levels at the end of April were similar to three months prior, while another 40 per cent said they were higher,” Jonathan Handford
Interim Managing Director – Fine & Country said.
Mortgage approval data further supports this view of market resilience.
There were 60,463 mortgage approvals in April, and while this represents a 4.9 per cent decline from March, it is only slightly lower than the same period last year, down just 2.1 per cent.
The annual rate of house price growth edged up slightly in May to 3.5 per cent, from 3.4 per cent in April.
This modest increase, following a brief softening in April, suggests that momentum may be returning to the market after the stamp duty changes.
Property prices have remained relatively stable in recent months, which is helping to support buyer confidence.
With 97 per cent of homes achieving their asking price, buyer motivation remains strong despite the changing economic landscape.
In the prime markets of England and Wales, the average property price stands at £1,146,750, down 8.3 per cent compared to the same time last year.
Regional variations are evident, with Scotland and the North West showing positive annual growth at 4 per cent and 0.3 per cent respectively.
Rural properties continue to outperform urban homes in terms of price growth.
Over the past five years, rural areas have seen average price increases of 23 per cent, compared to 18 per cent in urban locations.
Rural terraced homes have experienced the strongest price gains, while urban flats have shown the weakest performance.
The UK economy grew by 0.7 per cent in Q1 2025, exceeding expectations and primarily driven by the services sector.
GDP is now projected to grow by 1.2 per cent in 2025, slightly up from previous estimates of 1.1 per cent, with further growth of 1.4 per cent expected in 2026.
“Although the pandemic-driven surge in rural demand has eased, demand remains strong, driven by lifestyle changes such as remote working, a need for more space, and tighter household budgets,” Mr Handford said.
