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Property market moves towards ‘a lower activity environment’

13.11.22

Residential transaction volumes are likely to drop to under three-quarters of pre-pandemic levels in 2023, suggests Savills, and not recover until 2025.

Following on from its revised house price forecasts, Savills has expanded on its predictions for residential property transaction numbers over the next five years.

“Alongside a fall in values next year, we also expect a sharp fall in activity, with transactions only recovering back towards pre pandemic levels from 2025 onwards,” says the team, explaining that “there is a close link between home values and transactions volumes. It’s rare to see a dip in values without a corresponding fall in activity.”

Home-buying activity is likely to drop to under three-quarters of pre-pandemic levels in 2023, suggests Savills, driven down by limited mortgage availability, high borrowing costs, and “stretched” affordability.

But transactions numbers are set to remain “comfortably above” the 740,000 sales seen during the last big slump, in the depths of the Global Financial Crisis.

Savills expects buying activity to plateau at around 1.1mn transactions a year (slightly lower than the pre-Covid figure of about 1.2mn). The market will be “weighted towards more affluent households even after a correction in values,” suggests the team – which could mean headline average house price figures remain high.

Different property market sectors will probably recover at different rates, with cash buyers and home movers the first to bounce back into action, followed by first time buyers and mortgaged buy-to-let investors.

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