High interest rates drive down property sales

Property sales are falling across the country due to rocketing interest rates, according to new research.

Data from House Buyer Bureau reveals across Great Britain there were just 43,209 transactions in February 2023  this was -45.2% less than in December 2021.

The Bank base rate currently sits at 5%, following a 0.5% increase in June.

Higher mortgage rates serve to blunt people’s ambitions to buy

The average monthly level of transactions seen since December 2021 has declined at a rate of -3.4% per month.

The decline accelerated sharply this year, as sales volumes in January (44,635) and February 2023 (43,209) are -27.9% and 37% lower than the same months in 2022.

Managing director of House Buyer Bureau, Chris Hodgkinson, says: “The gloom is starting to set in across the UK, as higher mortgage rates serve to blunt people’s ambitions to buy.

“While some regions have fared worse than others, it’s clear that every corner of the market is feeling the effects of the current climate, as the perfect cocktail of high energy costs, high inflation and rising mortgage costs impacts affordability and confidence.

He added: “In the current environment the only possible winners are cash buyers, because – faced with less competition from mortgaged homebuyers – they are in a good position to haggle for a favourable purchase price.

Largest fall has been recorded in Wales

The largest fall in Great Britain has been recorded in Wales which has seen a drop of more than 50% since December 2021. The nation has also seen monthly transaction levels decline at an average rate of -4% per month over the last 15 months.

The second largest fall was recorded in the East of England at -48.1%.

Followed by the East Midlands (-47.3%), where monthly transaction levels have fallen at an average rate of -3.7% and -3.6% per month respectively.

Mortgage rates could climb even further

London has also largely reflected the rest of the market in terms of a reduction in market activity, with the number of homes sold falling by an average of -3% per month since December 2021.

Scotland has seen the smallest reduction in transaction levels, with the nation seeing an average monthly decline of -2.8% in the number of homes sold since interest rates started to increase.

Mr Hodgkinson says high-interest rates will cause mortgage rates to rise even further.

“We hope the Bank of England’s repeated base rate hikes fulfil their purpose and push inflation back near its 2% target. Until that happens it’s difficult to predict how high the base rate – and therefore mortgage rates  could climb even further.”

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