The number of UK residential transactions totalled 74,360 in May, 25% lower than May last year but 10% higher than in April, the latest figures from HMRC show.

But on a seasonally adjusted basis, property sales were down 3% between April and May, with transactions 27% lower than in May 2022.

Stacy Eden, partner and head of Real Estate at RSM UK, said: ‘Residential property transactions in May 2023 decreased by 27% on May 2022 to 805,000 and are approximately 20% lower than pre-pandemic levels. This highlights the slowdown in the residential market and that the housing market is softening rapidly due to inflation, flat GDP and rising interest rates taking their toll on purchasers.”

He added: ‘Looking at the bigger picture, residential and non-residential transactions are rapidly slowing, driven by interest rates of 5% and the difficulty in financing real estate transactions. House prices have already fallen by 5% since their peak in Autumn 2022 and probably have another 5% to fall which, with high inflation, is quite significant.”

Matt Thompson, head of sales at Chestertons, commented: “Many buyers paused to reassess their options at the end of last year and have sat on their hands while watching what the market does. Although interest rates have continued to rise, there has not been the big price correction that many commentators forecast and we are now seeing cautious confidence returning to the market with more buyers offering on properties and more sellers coming to the market.”

Kevin Roberts, MD, Legal & General Mortgage Services, added: “Overall property transactions have dipped in recent months. Partly this reflects a bit of a return to pre-pandemic norms, but it also shows that some buyers may be sitting tight, perhaps because they feel more uncertain about their finances and the future of the property market. The UK housing market is incredibly resilient, but it’s natural that some borrowers will have concerns when they are faced with an ongoing cost of living crisis and news of rising interest rates.”