The UK property market remained buoyant in March, with the number of transactions rising by 20% during the month, despite a cost of living squeeze.
According to the latest data from HMRC, the provisional non-seasonally adjusted estimate of UK residential transactions stood at 110,990 in March 2022, 18.2% higher than February.
However, this was 36.2% lower than the same period the year before due to pent-up demand and a race for space during the pandemic, and the government’s stamp duty holiday.
The estimate of UK non-residential transactions during the month was 12,470, 5.7% lower than March 2021 but 36.6% higher than February.
In addition to this, the provisional non-seasonally adjusted total of UK residential transactions during 2021 to 2022, at 1,370,870, was the highest financial year total since 2007 to 2008.
“There is always a flurry of activity in the spring, with transactions, buyers and sellers at this time of year all contributing to a blossoming property market,” Nick Leeming, chairman at Jackson-Stops, said.
“Our recent research looked at what is typically regarded as the ‘spring bounce’ and found that in March over the last 10 years transactions increased by an average of 28%. Whilst today’s figures are slightly lower than that, we’re still seeing that typical flourish of activity.”
However, Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, warned that “significant headwinds” were coming.
“How long the market can maintain this momentum remains to be seen,” she said, with the recent introduction of the new energy price cap and the national insurance increase further heightening pressure.
Watch: Will UK house prices ever fall?
She added: “Sellers may be keen to put their homes on the market to capitalise on rising prices, but they may find there is less interest in the coming months with interest rates pushing up mortgage rates and people increasingly tightening their belts to deal with soaring bills.
“With more interest rate increases on the horizon and inflation showing no sign of letting up, the coming months could show would-be buyers looking to shelve potential home purchases until the financial outlook settles down.”
It comes as the Bank of England (BoE) hiked UK interest rates for a third time in a row in March in a bid to dampen soaring inflation.
Members of the bank's Monetary Policy Committee (MPC) voted by a majority of 8-1 to raise interest rates to 0.75%, meaning rates are now at the highest level since March 2020 at the start of the pandemic.
Financial markets are expecting the BoE to hike rates to over 2% by the end of this year.
Watch: How does inflation affect interest rates?