The UK property market is facing a period of consolidation as property transactions dip, according to DJ Alexander Ltd.
The property management firm found that year-on-year property transactions across the UK were down in every month in Q1 2018 compared with the same period of 2017.
The first half of 2017 saw over 572,570 property transactions compared with 550,650 in the first half of 2018 – a year-on-year drop of 3.8%. In 2006, when the market peaked, there were 1,670,450 property transactions in the UK which fell to 858,350 in 2009. Transactions then rose to 1,235,020 in 2016 before falling slightly to 1,220,060 last year.
David Alexander, managing director of DJ Alexander Ltd said these figures highlight a slowing down in market activity, with a measured reduction in sales indicating a stability in the market that is now seeking consolidation.
“Prices and volumes have risen substantially since the low point of 2009 and there is a clear need to stabilise and bring affordability back into the market,” he said.
According to Alexander, the concern would be if sales had continued to rocket upwards matching the peaks of 2006 and 2007. The slowdown in volume also accounts for the recent stabilisation of pricing which is static with modest increases.
He explained: “This is subject to variation in different geographic areas with some parts of the country still experiencing substantial increases while others, which experienced the greatest rises, are now correcting themselves.”
The latest figures for mortgages show a year-on-year drop of 3.6% in first-time buyers, a 7.9% fall in new homeowner mortgages, a 19.4% reduction in buy-to-let (BTL) mortgages, but an 8.4% rise in remortgages.
However, there remain property hotspots in the UK in places such as Nottingham, Manchester, Edinburgh and Bournemouth where increases are considerably higher than other parts of the country.
“What is often forgotten is that the 2006-2007 property boom was the aberration in the property market and not the norm,” Alexander continued. “It made people believe that property prices could rise in double figures year-on-year forever.”
He said that booms like this are rarely positive as few people get out before the rise turns to a fall and generally most people suffer from such a cycle.
“Far better is a moderate, but steady, growth over decades rather than sporadic, albeit substantial growth over a couple of years which then disappears as quickly as it arrived.”