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House sales fall in latest blow to Britain's nervous property market

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Property sales have started to fall as rising mortgage bills and the cost of living crisis put an end to the post-pandemic house price boom.

Transactions fell by 10.5pc between March and April, according to HM Revenue & Customs. The monthly dip was just 3.9pc when accounting for a winter lull in home moves, however this was still the first fall since the end of the stamp duty holiday in October 2021.

Jason Tebb, of property website OnTheMarket, said: “It’s clear the frenetic pace of the housing market has subsided.

Buyers are grappling with soaring costs. Average two-year fixed-rate mortgage rates jumped to 2.35pc in April, up from 1.29pc in October. This was the sharpest six-month increase since 2003. Bills will rise further after interest rates hit a 13-year high earlier this month.

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Mark Harris, of mortgage broker SPF Private Clients, warned that the mortgage market is becoming increasingly volatile as buyers race towards the cheapest deals.

“Lenders are pulling rates at short notice, with nine lenders alone repricing on Monday,” said Mr Harris. “The ‘big six’ want to avoid being top dog because of the volume of business this attracts, which in turn impacts service levels.”

The drop in property sales was led by a particularly strong decline in England, where transactions fell month-on-month by 12pc. In Scotland, by contrast, sales rose by 6pc.

On a year-on-year basis, national sales fell by 12pc, but this was against record highs set in 2021 as buyers raced to take advantage of the temporary tax savings.

But homes are still being bought and sold at a much higher rate than before the pandemic. Across the UK, there were 106,780 completions, up 9pc compared to April 2019.

Nick Leeming, of Jackson-Stops estate agents, said: “Certainly, the first quarter of 2022 was the peak of post-pandemic related enthusiasm.”

First-time buyers will feel the pressures of inflation, which has now hit a 40-year high, most keenly, Mr Leeming added. This will hit demand at the bottom of the ladder, which will filter through the market, he said.

Karen Noye, of Quilter wealth managers, said that the full impact of the cost of living crisis has not hit the market yet.

“So far, the housing market has defied expectations and property transactions remain high. However, the cost of living crisis will surely be its biggest test yet.