After the onset of the coronavirus pandemic, the number of house sales in the United Kingdom plummeted, followed by a period of spikes and dips. In 2023, the housing market slowed down notably, with transaction volumes falling below 40,000. House sales volumes are affected by a number of factors, including mortgage rates, house prices, supply and demand as well as the overall health of the market. The economic uncertainty and rising unemployment rates has also affected potential buyers' intentions.
How have house prices developed?
With demand for housing remaining strong during the pandemic, house prices across the UK saw a dramatic increase. Between June 2021 and June 2022, the average house price in England rose by about 50,000 British pounds.
Dramatic increase in mortgage rates impacting home sales
For a long period, mortgage rates were at record-low, allowing prospective homebuyers to take out a 10-year loan at a mortgage rate of less than three percent. In the last quarter of 2021, this period came to an end as the Bank of England rose the bank lending rate in an effort to contain the spike in inflation. Naturally, the higher borrowing costs affected consumer sentiment, urging many homebuyers to place their plans on hold. In December 2022, about half of respondents in a survey among UK adults were pessimistic about the prospects of buying a property at the time of the survey.