Number of residential property transactions in the UK - Data and Analysis (2006-2032)

Over the five-year period through 2026-27, the number of residential property transactions in the United Kingdom is forecast to decrease at a compound annual rate of 4.2%, to reach 1,112,230 transactions. In 2016-17, the number of residential transactions plummeted by 12.8%, the first year-on-year contraction since 2010-11 (-1.8%) and the largest since the height of the financial crisis in 2008-09 (-46.2%). Prevalent uncertainty caused by the EU referendum result sent ripples through the economy and exerted a drag on confidence in the housing market, with prospective homebuyers delaying purchases. Moreover, the stamp duty land tax (SDLT) was increased by 3% on buy-to-let properties in April 2016, further weighing on demand. While the number of transactions stabilised in 2017-18 (+4.6%) - in November 2017, the government abolished the SDLT for first-time buyers paying £300,000 or less for a residential property, encouraging prospective homebuyers onto the property ladder - the number of residential property transactions retracted by 1.2% and 1.8% in 2018-19 and 2019-20 respectively. Advocated by the Royal Institution of Chartered Surveyors' UK Residential Market Survey, subdued activity in homebuyer markets was predominately driven by Brexit-related uncertainties, associated instability, prospective homebuyers being priced out of the market, and a lack of fresh housing stock.In 2020-21, the total volume of UK residential property transactions increased by 2.1%; however, this was almost exclusively driven by government stimulus support for the housing market, with the COVID-19 (coronavirus) pandemic and initial lockdown measures having instilled housing market uncertainty before a SDLT holiday and low borrowing rates encouraged homebuying activity. Initially, the UK property market was brought to an effective standstill by the coronavirus pandemic, whereby mandated public health restrictions (i.e., lockdown measures) forced estate agents to close and prevented in-person viewings; in turn, this compounded a collapse in transaction volumes simultaneously driven by potential homeowners and homesellers delaying the closure of transaction deals amid an instantaneous economic shock. On a quarterly basis, the total volume of residential property transactions plummeted by 47.4% in Q2 2020 (151,350), falling to their lowest quarterly level since comparable HMRC records began in Q2 2005 and representing the lowest volume of quarterly transactions since Q1 2009 (170,840).With government subsequently moving to relax restrictions affecting the property market, transaction volumes picked up as pent-up demand for property was released - some theorists and industry professionals were of the perception that prospective homebuyers were not retreating from the market per se, but rather waiting to act if and when coronavirus-induced market uncertainty dissipated to some extent, and if their perceived financial stability allowed for big-ticket purchases. To the benefit of would-be homebuyers and property market activity in general, the easing of restrictions complemented the introduction of a SDLT holiday on 8 July 2020 – it ended 30 September 2021 – and the Bank of England's (BoE) decision to cut the cost of borrowing to a record low on 19 March (0.1%) and hold it at this level until 16 December 2021. While mortgage lenders stress tested lending mechanisms and systems with greater scrutiny amidst prevalent market difficulties – banks did tighten lending criteria and reduced product availability (e.g., lower availability of high loan-to-value mortgages) – indicating that many adopted a risk-averse approach to mortgage lending, potential homebuyers looking to capitalise on a SDLT holiday before it expired, and those with a sufficient deposit, drove indicative recovery in transaction volumes. HMRC reported a 64.2% quarter-on-quarter rebound in UK residential property transactions in Q3 2020 (248,520), with volumes growing by 42.6% in Q4 2020 (354,370) to surpass the pre-pandemic level of Q4 2019 (299,140) – the last quarter of "normal" trading conditions pre-coronavirus – by some 18.5% and reach their highest quarterly level since Q1 2016 (386,380). To complete the fiscal year, volumes increased by 24.6% in Q1 2021 – the third consecutive quarter of double-digit percentage growth – to hit 441,690 transactions in the quarter, a level not surpassed since comparable records began in Q2 2005.Provisional HMRC estimates pointed towards a 14.9% year-on-year increase in UK residential property transactions over 2021-22 (1,374,050), with annual volumes reaching their highest level since 2007-08 (1,473,950) and year-on-year growth in the post-financial crisis era surpassed only by that in 2013-14 (22.8%). Despite transaction volumes contracting for three consecutive quarters through Q4 2021, from the record high of Q2 2021 and as a combination of temporary stimulus support being wound down and exponential growth in house prices pressured affordability for many, quarterly transaction volumes remained both above or in line with the long-term average, and above levels recorded during the lockdown nadir through near-term post-lockdown recovery period. Would-be homebuyers rushed to complete purchases to capitalise on the SDLT holiday before the 30 September 2021 deadline, so as to incur cost savings in consequence, while expectations of an imminent hike in borrowing rates further incentivised homebuyers to complete purchases sooner rather than later. Heading into 2022-23, however, the absence of stimulus support and pressure on personal finances – inflation rose to 10.1% in August 2022, representing a 40-year high – have caused transaction activity to lose momentum. Regarding said pressure on finances, exponential house price growth – the average price of a UK property was £286,000 in June 2022, up 7.8% on an annual basis – amid deficient housing supply and high demand artificially inflated during the pandemic, has raised the house price-to-earnings ratio, pricing many out of the market. Moreover, the BoE's decision to raise the base interest rate to 0.25%, 0.5%, 0.75%, 1.25% and 1.75% respectively in December 2021, February 2022, March 2022, June 2022 and August 2022, in order to nip inflationary pressures in the bud, has weighed further on affordability. Overall, the total volume of residential property transactions contracted by 13.6% in 2022-23.