There were 100,870 residential property transactions in May as completions increased 1.6% on April’s figures, according to the latest data from HMRC.
Non-residential transactions were also 0.4% on April to stand at 10,250.
On a seasonally adjusted basis residential transactions were up 1.3% and non residential by 6.1%.
Chris Hutchinson, CEO of rental platform Canopy, said: “Despite inflation and interest rates on the rise and the cost of living crisis still sweeping the country, property transactions are on the rise.
“First-time buyers will be scratching their heads at this, especially those that are struggling to get the necessary funds together for a deposit.
“With inflation showing no signs of easing, mortgages will continue to get further out of reach and push those with dreams of homeownership out of the market.
“It is becoming more important than ever to give these people a helping hand, especially by using their current financial habits to give them a boost.
“80% of renters have never missed a rent payment, yet for many this isn’t included on their credit history or score.
“This is the kind of financial habit that can provide a much welcome boost at a time where the market is incredibly competitive, and help a first-time buyer make their first steps onto the property ladder.”
Kevin Webb, managing director, Legal & General Surveying Services, added: “As we approach the midpoint of the year, the peaks of the market are levelling out, especially as we begin to see the impact of rising mortgage rates and living costs on the housing market.
“Of course, while this may have slightly dented enthusiasm in the market, activity certainly hasn’t run out of steam.
“With the Help to Buy scheme coming to a close, and housing market supply-demand starting to rebalance, serious buyers remain determined to proceed with their purchase plans.
“With another interest rate hike further complicating peoples’ finances, home surveys are increasingly becoming a valuable tool in helping prospective buyers make well-informed purchase decisions.
“Being aware of issues that could arise in the future, can help buyers claw back any costs that could cause a further dent in their pockets.
“Ultimately, purchasing a home is one of the largest and most costly decisions people will make, and having the added security of a survey can ease anxieties during a trying time.”
Further reaction
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“There are still signs of strong activity in the market even though some of the heat has come out of it, and mortgage brokers remain exceptionally busy.
“Yet another in a string of rate rises from the Bank of England is certainly focusing the minds of borrowers, keen to secure a fixed rate mortgage before pricing edges higher.
“Service levels vary considerably between lenders, and it can take time to get a mortgage approved, particularly if the application is complex or the borrower is self-employed. Buyers who are competing for a hotly-contested property should seek advice from a broker to ensure they are not disappointed.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Transactions, which are probably a better measure of market health than more volatile prices, are often the last to reflect change.
“The protracted period between the date a sale is agreed and completion means we can wait several months to notice something is up.
“Previous falls in sale numbers could partly have been blamed on shortage of stock but we are now finding, at the sharp end, a softening in demand prompted principally by the rise in inflation, as well as uncertainty as to when it will end.
“That lack of choice, combined with low unemployment and rising wages, mean no major corrections are expected.”
Joshua Elash, director of property lender MT Finance:
“Transactional activity in the residential market continues to be stable. It’s impressive that transaction numbers are only marginally down on May last year, a time when stamp duty exemption initiatives encouraged a great deal of activity. This speaks directly to the underlying supply and demand gap which has, and will continue, to drive stability and growth in the market.
“Equally, if not more interesting, is the fact that transactions in non-residential assets are at the highest May level for nine years as investors continue to seek value in commercial property as that part of the market fully rebounds from the pandemic.
“The data demonstrates that the market yet again continues to weather the macro-economic storm raging as inflation and the cost-of-living crisis bites in other sectors. The decision by the Bank of England to end mandatory stress-testing will ensure that this trend continues in the months ahead.’
Anna Clare Harper, director of real estate technology platform IMMO:
“Housing transactions are important because they drive house prices, which both reflect and affect our confidence, and the economy.
“These transaction numbers make sense for two reasons: firstly, the desire to buy or sell is lower than this time last year. Secondly, the desire to hold onto property is greater.
“Last year’s temporary stamp duty reduction encouraged homeowners to upgrade and aspiring homeowners to get on the housing ladder.
“This boosted transactions substantially. In fact, the monetary value of average house-price growth far outweighed the monetary value of that reduction in tax, but this was not a barrier due to widely available, cheap mortgage finance, which funds property acquisitions but not transaction taxes. With stamp duty back, the desire to transact is reduced.
“What’s more, homeowners and investors alike feel safe owning residential property, since it tends to hold its value well through times of uncertainty and risk, as we are in.
“All of this is a problem for the market, since there are negative social implications of people holding on to poor quality, environmentally-inefficient housing rather than selling it onto a new owner who could improve it, and make the most of the asset.
“It adds fuel to the fire of the biggest problem in the market right now: the shortage of quality housing stock to purchase or for rent.”
Karen Noye, mortgage expert at Quilter:
“UK monthly property transactions have continued to slow in comparison to the pace witnessed last year, but for now they remain higher than pre-pandemic levels and May even saw a slight uptick compared to April’s figures. While the cost-of-living crisis has now heavily set in, it is still yet to completely stifle the property market.
“The adjusted estimate of UK residential transactions in May 2022 is 109,210, a fall of 5.1% compared to a year earlier but 1.3% higher than April 2022. In comparison to pre-pandemic levels, the number of property transactions in May 2019 was 96,500 on a seasonally adjusted basis. While transactions are still higher than pre-pandemic levels, we are slowly returning to some semblance of normality as while we have seen mildly higher numbers in 2022, the number of transactions has breached 100,000 on multiple occasions in the last decade.
“People have been anticipating a dip in the housing market for months now, with those hoping to get a foot on the ladder holding out for a subsequent fall in house prices. However, so far the major global events we have experienced in recent times have had surprisingly little impact. The housing market has so far defied expectations and transactions and house prices have remained consistently high. However, the cost-of-living crisis will no doubt be its biggest challenge yet.
“Just last week the Bank of England hiked interest rates to 1.25% as it now predicts inflation to hit more than 11% later this year. Soaring inflation, the rising cost of living, high energy bills which are set to increase even further in October and minimal support from the government mean many people are feeling the pressure financially. What began as a financial ‘pinch’ is now a heavy burden on an increasing number of households, and with wages failing to keep up the high costs of moving home will put off prospective buyers and taking a first step onto the property ladder will be pushed even further out of reach for many first-time buyers.
“Yesterday the Bank of England announced its rather baffling intention to loosen its mortgage affordability rules. While the announcement came as a shock to many given the current circumstances, the change may not be as significant as it sounds as the loan to income (LTI) ‘flow limit’ will not be withdrawn, which has a much greater impact on people’s ability to borrow. Even still, this change could see an uplift in interest in the property market in the shorter term.
“Ultimately, the high costs and ever-increasing squeeze on our everyday finances will likely see the number of property transactions driven down in the coming months, and we may finally begin to see a slowdown in the property market and a subsequent dip in house prices as a result.”
Richard Pike, Phoebus Software sales and marketing director:
“Although the outlook is one of harder times to come we have to be encouraged, in the short-term, that monthly completed transactions are higher now than they were at the same point in 2019.
“It appears that despite, or because of, the threat of rising interest rates there was plenty of impetus for people to buy or move in the first quarter of this year.
“Whether that same impetus will remain now that we have seen the first rate rises is debatable.
“However, it has to be said for those of us that remember the eye-watering rate of 17% in 1979, current rates are still very low.
“It all now depends on how many more increases the Bank of England feels will be necessary to bring inflation under control, and how that will translate for mortgage borrower rates later this year.”
Conor Murphy, CEO at Smartr365:
“Property transaction figures remain strong, despite figures having dipped slightly compared to the unprecedented levels of activity that marked last year. It’s a testament to the health of the numbers remain resilient, even in the face of rising interest rates and inflation.
“However, complex economic conditions spells a pivotal time for advisors and consumers. More than ever, prospective buyers will be looking for advice, reassurance and expertise to help them navigate such circumstances. Investing in mortgage technology will be invaluable to advisers looking to process applications more efficiently, allowing them to provide much-needed guidance and expertise.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“After a slight dip in April, the number of property transactions has increased again, with over 100,000 homes being sold in May.
“The market continues to defy expectations that a slowdown is looming and it appears that increases to the cost of living and interest rates haven’t deterred people from finding the right property.
“As the demand for homes remains robust, so too will house prices, and while first-time buyers might be looking for something more affordable, it is unlikely that we will see a dramatic readjustment anytime soon.
“Estate agents continue to see a shortage of stock, with buyers ready and waiting for them to offer up a new property for sale. So long as these factors remain the same, sales will likely continue moving upwards, despite the current economic conditions.”
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown:
“There’s still plenty of life left in the property market, but it’s nowhere near as lively as it was at the peak, and it’s not going to perk up much from here.
“May saw slightly more sales than April, but slightly fewer than a year earlier. This is a world away from the peaks we saw in June last year, when roughly twice as many homes were sold. Over time, we can gradually expect sales to fall back, because we’re increasingly seeing buyers think twice about getting into the market, and last week’s rate rise isn’t going to help.
“The latest RICS residential survey saw new buyer enquiries fall slightly in May, and the agents reported that even those who were house-hunting were incredibly cautious. A toxic combination of runaway inflation, sky-high house prices and another bump in interest rates is starting to take its toll, and some buyers are rethinking whether they can really afford to stretch themselves at the moment. Even if their sums still add up, they’re starting to worry that they could end up over-exposed if everyone else starts pulling back and price rises drop off.
“We expect sales to tail off as we go through the year, but as May’s figures show, it’s not going to be a steady downwards path just yet. There are still plenty of buyers who have been searching for a property for months, so as sellers slowly shuffle onto the market, these long-term hunters will finally find the property they want. It means this particular period of higher sales may well have a reasonably long tail.”
