In the year leading up to July, residential property sales in England and Wales totaled just over one million, marking an 11.4% decrease from the previous year’s transaction volume. While this figure may seem like a significant drop, it’s important to contextualize it within the broader real estate landscape.
Comparing the current numbers to the heightened transaction activity seen during the peak of the pandemic, it’s evident that we’ve returned to a more typical market scenario. In fact, the current volume is only 7.8% lower than the average observed in the five years leading up to 2019, the pre-pandemic era.
One might naturally wonder whether a decline in sales volume correlates with a proportional drop in property prices. History provides some intriguing insights into this question. Generally, real estate sales and prices tend to move in harmony throughout market cycles, but they often do so on different scales.
Taking a trip down memory lane to the last significant housing market downturn, we can see that the most substantial annual decrease in sales volume reached -47.6% in the year leading up to February 2009. In contrast, property prices experienced their most severe decline during the year ending in March 2009, with a decrease of -15.4%.
Source: #Dataloft, Land Registry and HMRC, data available up to June/July 2023
These historical patterns underscore the intricate relationship between sales activity and property values, demonstrating that they are not always mirror images of each other in the complex world of real estate.