Housing Recovery Hits Hurdles, Knight Frank Warns

After a 28 per cent drop in April transactions, recovery still looks uncertain. What property professionals should plan for next.

House sales in the UK dropped by 28 per cent in April as the stamp‑duty deadline ended and buyers stepped back. That is the warning from Knight Frank’s latest research on the housing market. The combination of higher borrowing costs and cautious buyer behaviour means recovery may happen more slowly than expected, the firm says.

For developers, investors and agents, the report suggests new assumptions for market timing will be essential. In this article we break down the data, analyse implications for different sectors, and map out strategic moves for the months ahead.

What the Data Shows

Knight Frank’s research highlights two key facts:

• UK housing transactions fell sharply in April, down 28 per cent compared to previous months.
• Despite that drop, prices continue to hold in many parts of the country, with Knight Frank expecting only moderate recovery through summer .

This pattern reflects a common post‑stamp‑duty adjustment. Buyers who rushed to close in March left April quiet. The question now is whether conditions will support a bounce or whether a slow‑burn recovery is more likely.

Why Momentum Has Slowed

Three main factors are keeping the market subdued:

1. Mortgage affordability remains tight

Even though interest rate rises have paused, borrowing costs are still high compared to previous years. Mortgage approvals remain limited, squeezing buyer numbers.

2. Related saw prices flattening

With more properties to choose from and buyers cautious, asking prices are holding firm but not trending upwards. A flat market increases length of sale cycles.

3. Buyer expectations have changed

Market sentiment has adjusted. Buyers who expected rapid gains in 2021 now view housing as a longer‑term investment. Decisions are being made with greater financial caution tied to job security and inflation.

What This Means for Property Stakeholders

Developers

Launch strategies may need revising. Buyers are seeking guarantees over timing and build quality rather than early-bird pricing. Joint‑venture projects and public-sector partnerships with stability baked in may gain traction.

Estate Agents

With lower transaction volumes, conversion and retention matter more than ever. Keeping relationships active, building local insight and enabling quick offers will separate top performers.

Investors

Letting and flipping strategies may perform better than speculative buy-to-buys reliant on rapid price growth. Focus on long‑term cash flow and geographic areas with stable rental demand.

Lenders and Brokers

Affordability is central. Showing clients available options based on current rules—not historic expectations—and highlighting longer-term fixed-rate deals could win trust and applications.

Signs of opportunity amid the slowdown

Despite subdued conditions, some areas look set to outperform:

• Locations with strong employment demand continue to see stable sales
• Regions with below-average housing stock are showing resilience in prices and volume
• Developers that deliver energy-efficient and well-socialised builds are seeing quicker take-up

Summer is still expected to bring improved activity, especially if mortgage regulation shifts and consumer sentiment improves.

Strategic Takeaways

1. Refresh market assumptions

Track local sentiment and pricing trends weekly rather than rely on national snapshots.

2. Rework product offerings

Adjust build and marketing specifications to reflect buyer priorities—affordability, functionality, and long-term value.

3. Collaborate with lenders and brokers

Joint initiatives can surface early insights on finance availability, enabling more targeted buyer support.

4. Plan for uncertainty

Assume phased launches, hedging built-in financial margin for slower absorption.

Final Thought

The sharp 28 per cent drop in house sales sends a clear signal: the market has moved past stimulus-driven expansion. Heading into late 2025, recovery will rely on a blend of regulatory support, affordability, and quality of product.

This means the smart players will not follow headlines. They will respond at a local level, align with buyer sentiment and be ready to pivot quickly when conditions shift.

Stability and responsiveness will be the true currency of success in the next quarter.