UK property transactions halve in May as market bottoms out

Property transactions in May were 50% lower than the figure recorded 12 months ago, according to provisional government data.

However, the total of 48,450 was a 16% increase on April, suggesting transactions have bottomed out, although the future trajectory of the property market remains unclear against a backdrop of mixed economic data.

The fall comes after the UK entered lockdown on the 23 March as a result of Covid-19. As part of its measures to limit the transmission of the virus, the Government introduced social distancing measures for the property market on two days later, effectively suspending it.

The restrictions were lifted on 13 May in England and later other parts of the UK although they remain in force in Scotland.

Since the market re-opened in England, demand indicators have risen to levels that suggest sales and lettings transactions will increase over coming months.

However, doubts surround the longevity of the current bounce and there is uncertainty related to the economic impact of unwinding the government’s furlough scheme.

“Demand built up as a result of the lockdown but also the political turbulence and changing tax landscape of recent years,” said Tom Bill, head of UK residential research at Knight Frank.

“The market has picked up where it left off following December’s general election. However, we are not yet in a position to fully assess the economic impact of the pandemic, which means 2020 could produce a particularly uneven pattern of activity.”