The number of residential property transactions stood at 96,290 in June, down 3.1% on May, according to the latest figures from HMRC.
Transactions were down a whopping 55.1% on June 2021 which was boosted by a surge of purchases in anticipation of the first stamp duty holiday deadline.
Non-residential transactions in June 2022 is 8,850, 24.3% lower than June 2021 and 9.5% lower than May 2022.
Reaction
Emma Cox, MD of Real Estate at Shawbrook:
“The transaction figures show demand remains strong, despite a stern economic headwind and the well-documented cost-of-living crisis. Many buyers remain undeterred despite the current challenges and financial implications of soaring inflation.
“House prices continue to defy any sense of normality as a result of the demand, though the current market conditions do point towards an eventual cooling.
“An influx of quality, affordable housing remains the key component of restoring some balance to the market, which will not be fully possible without necessary government support.
“The lack of supply also continues to hamper the rental market; which, coupled with the competition for rental properties, is likely to continue to drive rental prices upwards.
“Lenders remain keen to support potential buyers, many of whom are eager to get transactions completed before future interest rate decisions.”
Emma Hollingworth, distribution director, MPowered Mortgages:
“As we approach the mid-point of the year, it’s encouraging to see transaction figures remain strong, albeit without the high level of activity that marked the beginning of 2021.
“However, whilst the transaction process is stabilising, buyer confidence is undoubtedly being dented by the cost-of-living crisis, as seen in the declining completion figures.
“With house prices soaring for a sixth consecutive month and rates steadily climbing on a regular basis, speed is essential for those looking to buy a home.
“Amongst political and economic uncertainty, homebuyers should quickly and efficiently look to lock in mortgages before rates move again.
“The window of availability on mortgage deals is now shorter than it has ever been before, averaging just 21 days.
“At MPowered Mortgages, we are using data-driven innovation and targeted AI to help increase automation, reduce complexity, and speed up the process of receiving a legally-binding decision allowing brokers to help to secure the best outcome for homebuyers and remortgagers during this uncertain and volatile period for the mortgage market.”
Vikki Jefferies, proposition director at PRIMIS Mortgage Network:
“With rates rising rapidly and high inflation biting, it is more important than ever that people have access to the right advice and the most suitable products for them. Prospective buyers are being strained by these financial pressures and this means that fewer of them are buying properties. As a result, the market is slowing down after the initial increase in activity at the start of the year.
With the cost of living continuing to soar, the market is becoming increasingly complex. AR brokers are in a strong position to meet the needs of prospective buyers at this time. They must ensure that they are signposting the best products for their clients amid the ongoing economic turmoil.
Danny Belton, head of lender relationships, Legal & General Mortgage Club:
“Today’s figures showcase the strength of the UK property sector, even in the face of a number of economic headwinds. Despite some fluctuations, the market remains incredibly busy.
“With high levels of remortgage activity as well as purchase, lenders and advisers alike are having to work hard to keep pace with demand from clients. There are, of course, significant regional differences though and market conditions can vary greatly from area to area.
“In such a competitive and, at times, complex market, good advice is worth its weight in gold. Advisers will be able to support borrowers with invaluable insight into local market activity and give them access to many deals that are not available directly from lenders. Advisers will also be able to help guide prospective borrowers to a deal that best accommodates their individual circumstances.”
Conor Murphy, CEO and founder, Smartr365:
“Current market activity is best described as hot, but not scorching. This is to be expected as we move out of the annual ‘spring bounce’ and into the summer period where lots of buyers, sellers, and mortgage professionals take a well-earned break in the sunshine.
“Given wider economic stresses, some will have also inevitably postponed their transactions until they feel more financially secure.
“This cocktail of factors highlights the importance of integrating tech to streamline the homebuying journey.
“We are now in a position where buyers can complete their mortgage journey using an app, start to finish, meaning brokers can progress applications round-the-clock and round the world if need be.
“It’s this more agile, modern approach that will be crucial to the mortgage market levelling up. The future is now.”
Simon Webb, managing director of capital markets and finance at LiveMore:
“This year has been a bit up and down on a monthly basis for housing transactions but on a seasonally adjusted basis they are relatively steady and not dissimilar to pre pandemic levels.
“The 3.1% monthly drop in housing transactions in June could be the start of a summer lull. With an uncertain economic environment ahead as the cost of living continues to rise along with interest rates, people may put their house buying plans on hold. However, we are seeing house price growth slow down so affordability may still be in reach for potential buyers.
“But the bottom line is a continued lack of supply in the housing market. The new Prime Minister, whoever he or she may be, must make housing and the infrastructure to support it a priority.”
Stuart Wilson, corporate marketing director of more2life:
“After a busy start to the year, property transactions are slowly starting to settle as we reach the mid-point of 2022.
“Supply and demand issues have contributed to a competitive market with high house prices making the first step onto the property ladder harder and harder for first-time buyers to reach.
“The need for intergenerational support is growing ever more necessary, as young people looking to buy their first home are turning to financial help from family during what is such a financially challenging period.
“Thankfully, with house prices high, over-55s are in a powerful position to support younger first-time buyers, as they have access to equity tied up in their property.
“With the cost-of-living crisis meaning many younger people in the UK are delaying or giving up their dreams of homeownership in the near future, gifting these funds can be a great help to boost their chances of getting onto the ladder.”
Joshua Elash, director of property lender MT Finance:
“The cost of living crisis is starting to bite with a dramatic fall in transactional activity in the property market compared with the same period last year, reflecting broader uncertainty in the economy as a whole, as well as the frenzy we witnessed last year when the stamp duty holiday was about to expire.
“We must be watchful as this trend could well lead to a more significant and swifter cooling of the housing market than expected which will translate into downward pressure on house prices as home owners and investors alike focus on cost savings.”
Jeremy Leaf, north London estate agent and a former RICS residential agent:
“Although inevitably reflecting activity of several months previously, these figures are always a better indicator of housing market strength than more volatile house prices.
“The latest numbers are no exception and show how the cost of living crisis and rising interest rates in particular have contributed to an increase in the length and reduction in the number of transactions.
“Nevertheless, at the sharp end we continue to see a steely determination to move, particularly from those keen to take advantage of attractive mortgage offers which are imminently expiring.”
Richard Pike, Phoebus Software sales and marketing director:
“Despite this fall in transaction volumes, a fall of 11% from May and the lowest level since November last year, this figure does not reflect the expected collapse of transaction numbers that many predicted as a result of squeezed household income, rising rates and tighter affordability conditions imposed by lenders.
“Despite the drop in monthly completions, the mortgage market continues to be resilient, underpinned by robust house prices with a year-on-year increase of 13% reported in May.
“Although completion times are being stretched because of resource issues in conveyancing, fundamentally there remains an appetite from lenders to lend and borrowers to borrow.
“There is of course the expectation of further rate increases as inflation continues to rise and this must have an impact on affordability in the future but the greatest unknown in the mortgage market currently is what focus and priority the new Prime Minister will have on the housing sector.”
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. The extreme reduction in transactions since last year is in some ways unsurprising.
“Without the incentive of the temporary stamp duty reduction, and with higher mortgage finance costs, homeowners are more likely to upgrade than to upsize or downsize, and move. In addition, we are in a time of uncertainty and volatility, meaning people are more likely to want to hold onto property, a relatively stable asset.
“This is problematic as more transactions mean more flexibility for households to move as their lives change. Fewer transactions reflects and creates friction.
“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.”
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.
“With another rate rise on the cards next month, this is focusing the mind of borrowers who are 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. Buyers who are competing for a hotly-contested property should seek advice from a broker to ensure they are not disappointed.”
Colin Bell, co-founder and COO, Perenna:
“The Bank of England has responded to higher inflation levels by raising interest rates. This has in part caused demand in the property market to slow when compared to the high levels of activity we saw in 2021.
“While lower levels of demand might soften some of the double-digit house price growth of recent months, the rising cost of living and higher interest rates will make it harder for borrowers to take their first step onto the property ladder.
“There also remains a lack of supply for new property, which will continue to fuel house prices beyond interest rate controls.
Andrew Bailey, the Governor of the Bank of England, in his Mansion House speech this week has made it clear that using 0.5% rises in interest rates will be on the table at the next MPC. If inflation continues this will be part of the approach to trying to stem inflation.
“Today it was announced that inflation had risen to 9.4%, this makes interest rate rises of at least 0.5% more likely. As we enter Q3 and Q4 when there will be another energy price cap rise and people start using their utilities more heavily in Winter, this is going to bite hard for consumers.
“Long-term flexible fixed rate mortgages will be key to helping buyers overcome the affordability challenge, allowing borrowers to access higher levels of lending safely, while also giving consumers the certainty that their monthly repayments won’t rise in the future, whilst their household costs are rising and may continue to.
“Stability in mortgage payments is key to providing cost protection to consumers and allows the Bank of England to use interest rate controls without affecting mortgages.”
Karl Wilkinson, CEO, Access Financial Services:
“The non-seasonally adjusted figures for property transactions look like they have fallen off a cliff at 55% lower than last year.
“While it is clear that we are starting to see a slight slow down in transactions, it is not as dramatic as the figures would lead you to believe.
“The stamp duty holiday ending in June last year dramatically distorted the market, stimulating a huge spike in transactions as people tried to buy before they had to pay stamp duty again.
“Following that, every June is likely to look like a drop.
“Instead, we are seeing a slight easing back of demand to more sensible levels.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“It’s tempting to assume that any fall in property transactions is the result of current economic troubles. Don’t be fooled into thinking that a downturn is on the horizon.
“Every month we see house price growth defy expectations, with the volume of sales resilient thanks to buyers who are determined to get their foot on the property ladder.
“It remains to be seen whether a dip this month will be the start of a slowdown in the market. Sales are down 55% compared to this time last year, when the frenzy of the stamp duty holiday was in full swing.
“We are still seeing a strong demand for good quality housing, and many estate agents are inundated with enquiries. A fall in transactions is likely to be the result of demand outweighing the supply.”
Charlotte Nixon, mortgage expert at Quilter:
“UK monthly property transactions have slowed dramatically in comparison to the rapid pace witnessed in June last year when the first stage of the stamp duty holiday was withdrawn, and they now sit even lower than pre-pandemic levels.
“With the cost-of-living crisis now weighing heavily on people’s finances, we may be witnessing the start of the long-awaited slowdown.
“The adjusted estimate of UK residential transactions in June is 95,420, 54.3% lower than June 2021 and 7.9% lower than May 2022.
“In comparison to pre-pandemic levels, June 2022 saw transactions dip below 100,000 for the first time since June 2013 – excluding the 2020 anomaly – suggesting the wind has finally been knocked out of the sails of the housing market.
“A dip in the market has been anticipated for a long while now, with those hoping to get a foot on the ladder holding out for a subsequent fall in house prices. Up until now the major global events we have experienced in recent times have done little to stunt its progress and the market continually defied expectations with growing prices and sky-high transaction levels.
“However, the cost-of-living crisis appears to have finally taken its toll and this month’s fall in property transactions could mark the beginning of the end for the rampant market environment we have seen for the past couple of years.
“With inflation now sitting at 9.4%, the Bank of England is expected to hike rates further at its next monetary policy meeting which will push mortgage rates even higher than their already elevated state.
“Soaring inflation, the rising cost of living, high energy bills which will increase even further later in the year and minimal government support mean the cost-of-living crisis has fast become a major financial burden for many people.
“With wages failing to keep up, the high costs of moving home will put off prospective buyers and we could see an even greater slowdown in the coming months.
“The UK continues to face a severe financial problem and the housing market faces its biggest challenge yet as the cost-of-living crisis takes hold.”
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown:
“This is meant to be bumper house buying season, but sales have started drying up. Aside from a low point early in the pandemic, we haven’t seen a June this slow in nine years.
“The spectacular drop from a year earlier needs to be taken with a pinch of salt, because this was the peak of the market, when we saw a stampede of buyers desperate to complete before the stamp duty holiday became decidedly less attractive. However, the monthly movements are starting to add up to a general downwards trend.
“We had seen higher sales in May, but lines are never entirely straight when you’re following the property market. It’s like walking a dog towards town. Tracing its path is going to be a complex zig zag depending on the interesting smells it discovers along the way, but over time you can see where it’s heading, and property sales figures are heading slowly south.
“This owes something to the fact that it’s still incredibly difficult to find somewhere to buy. Rightmove figures show that despite a shift in the balance of supply and demand, we still have a quarter more buyers than the same time in 2019 and 40% fewer sellers, so plenty of keen buyers are still being thwarted by miserable stock levels.
“However, we’re also seeing signs that buyers are getting cold feet. Demand has fallen, and those buyers who are still looking are increasingly cautious. We’re seeing fewer bidding wars, more sales falling through as buyers push for a price drop. and at the higher end of the market more people are having to accept a lower offer. These aren’t enormous shifts, but again, the overall trend is telling.
“We expect sales continue to tail off as we go through the year, it won’t be a straight line, but our zig zagging property sales figures aren’t heading in a particularly positive direction.”
