Home sales tumbled by 27% in May compared with the same month a year earlier, according to HM Revenue and Customs (HMRC) figures.
Across the UK, 80,020 transactions were recorded in May 2023, which was also 3% lower than in April 2023.
HMRC’s report said the big fall compared with May 2022 “is partly due to higher number of bank holidays in May 2023, but also represents the decline in general market conditions in recent months”.
Mortgage rates have been jumping amid expectations over inflation, while there are also signs of house price growth becoming weaker.
Nationwide Building Society reported on Friday that house prices fell by 3.5% annually in June and on a month-on-month basis increased only slightly, by 0.1%.
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics) said: “The downwards trend in transaction numbers continues, partly highlighted by the strong numbers prevailing at this time last year.
“Transactions always provide a more accurate reflection of market health than property prices. Mortgage upheaval and inflation concerns have meant fewer buyers and more protracted negotiations, which is resulting in fewer transactions.
“However, buyers and sellers still seem determined, where finances permit, to ensure sales proceed even though they are taking their time over it.”
Kevin Roberts, managing director, Legal & General Mortgage Services said: “Overall property transactions have dipped in recent months.
“Partly this reflects a bit of a return to pre-pandemic norms, but it also shows that some buyers may be sitting tight, perhaps because they feel more uncertain about their finances and the future of the property market.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Transaction numbers continue to come under pressure in the face of higher interest rates and the cost of living.
“Swap rates, which underpin the pricing of fixed-rate mortgages, continue to rise.”
Jason Tebb, CEO of property search website OnTheMarket.com, said: “With the potential for further interest rate rises and lenders pulling their mortgages and repricing upwards, borrowers are likely to have concerns around affordability.
“While there are people who need to move and will do so regardless, sellers must price realistically if they are serious about transacting in coming months.”
