Property market is hot but cooling amid cocktail of low stock, high inflation and uncertainty
The UK’s property market is still going strong, despite fears that rising inflation and the cost of living crisis will choke growth.
The number of properties changing hands fell again last month in comparison with its pandemic heights last year. However, with some 100,870 homes sold in May, the latest government data has found a 1.6 per cent increase since April.
Transaction levels remain higher than pre-pandemic, although, government estimates reveal that it expects the market to continue to slow next year.
“There are still signs of strong activity in the market even though some of the heat has come out of it, and mortgage brokers remain exceptionally busy,” Mark Harris, chief executive of mortgage broker SPF Private Clients said.
While the pandemic-era race for space and stamp duty holiday sparked a frenzy in the market, lockdown restrictions colliding with post-Brexit bureaucracy and a boom in e-commerce has seen businesses and real estate investment funds alike, racing to snap up non-residential logisitics spaces.
Non-residential transactions in May rose nearly 10 per cent higher to a total of 10,250, when compared with a year ago.
However, transaction levels have climbed just 0.4 per cent since April, in yet another sign the market is cooling.
“Previous falls in sale numbers could partly have been blamed on shortage of stock but we are now finding, at the sharp end, a softening in demand prompted principally by the rise in inflation, as well as uncertainty as to when it will end,” explained Jeremy Leaf, north London estate agent and former RICS residential chairman.
“That lack of choice, combined with low unemployment and rising wages, mean no major corrections are expected.”