There were 110,970 residential transactions in July 2022, 32.9% higher than July 2021 and 7.2% higher than June 2022, according to the latest figures from HMRC.
Additionally, there were 10,380 non-residential transactions in July 2022 is 10,380, 3.8% higher than July 2021 and 5.1% higher than June 2022.
On a seasonally adjusted basis residential transactions in July 2022 is 104,470, 36.7% higher than July 2021 and 3.2% higher than June 2022.
Reaction
Tomer Aboody, director of property lender MT Finance:
“Transaction levels are still relatively low which is the main reason that property prices remain high, even though interest rates are going up along with inflation.
“With the need to stem the increase in property pricing, higher interest rates are not the only solution. We have been calling for a restructure of stamp duty for some time, encouraging those in bigger family homes to downsize.
“We are seeing buyers becoming more cautious than in the past few years, fearing rising costs. Borrowers are trying to lock into an extended fixed rate, as inflation is predicted to increase which in turn will push rates much higher, potentially as high as 5% to 6%.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“There is still evidence of strong activity in the market even though some of the heat has come out of it, and mortgage brokers remain exceptionally busy.
“With yet another rate rise on the cards next month, borrowers are keen to secure a fixed-rate mortgage before pricing edges higher. Lenders remain keen to lend but rising energy bills will inevitably have an impact on affordability calculations.
“Some transactions are still taking longer than one might expect so buyers competing for property should seek advice from a broker to ensure they are not disappointed.”
Emma Hollingworth, distribution director, MPowered Mortgages:
“It is positive to see transaction figures remain strong, with a slight increase in July. Despite this, there is still no doubt of the strain prospective buyers are under amid the cost-of-living crisis, as interest rates and inflation levels continue to rise along with mortgage rates.
“What’s clear is that we as an industry need to continue to support homebuyers and remortgagers at these challenging times, both through adapting our product range to respond to their needs and improving the mortgage journey.
“At MPowered Mortgages, our suite of prime residential products include cashback options, a free valuation on every application, rolling end-dates and no arrangement fee options – designed to ease the financial pressure of buying and remortgaging a home.
“Additionally, our mortgage platform harnesses the power of AI and innovative technology to make the mortgage application process quicker, easier and more certain for homebuyers and those remortgaging.”
Danny Belton, head of lender relationships, Legal & General Mortgage Club:
“The UK property market is like a patchwork quilt, made of various markets that all have unique trends. For example, the prime London market is entirely separate to the wider UK residential market.
“However, it’s inevitable these markets will all be affected by the economic downturn to some extent. There’s no escaping that purchasing power, confidence, and disposable income will likely decrease as we edge towards the end of the year.
“But this isn’t time to panic. The UK property market is one of the most resilient around and is therefore a favourite among investors.
At Legal & General, we have seen an increase in mortgage searches from June to July, while those on behalf of first-time buyers and first-time landlords remain second most popular, despite this being one of the cohorts people are most worried about.
“We would be doing the industry a disservice if we were to underestimate its resilience.”
Anna Clare Harper, director of real estate technology platform IMMO:
“Housing transactions indicate demand and how easy it is for people who want to, to buy and sell. They are also important because transactions drive house prices. House prices are often used as an indication of how well the economy is doing.
“The significant annual growth in transactions reflects the influence of policy and lockdowns, the last of which ended in July 2021. As a result, it is unsurprising that, with the benefit of temporary stamp duty relief for part of that period, and the absence of lockdowns, transactions have recovered in the last year.
“Going forward, the flow of ‘essential’ transactions, where a homeowner needs to move, are likely to continue. Non-essential transactions, for example where a property owner owns more than one property, or does not need to downsize, upsize or move, may slow down without the incentive of the temporary stamp duty reduction, and with higher mortgage finance costs due to interest rate rises.
“The trouble with this is that fewer transactions mean households have less flexibility. We are already seeing worsening shortages in rental housing force rents up, and the same is happening in the less flexible market for owned property, although the pace of house price growth is likely to slow.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“As always, property transactions are a better barometer of market strength than more volatile prices. However, these figures, though positive, reflect what was happening several months ago since when the market has moved on.
“On the ground, we are finding demand is still there but concerns about the rising cost of living and interest rates are prompting a more cautious approach which is reducing numbers and increasing the length and reducing the number of sales.
“On the plus side, sales agreed are maintaining their levels with buyers and sellers negotiating harder to ensure their move can get over the line.”
Richard Pike, chief sales and marketing officer at Phoebus Software:
“Looking at the non-seasonally adjusted figures in July it is no surprise that the number of transactions in July is higher than in July 2021, given that the SDLT holiday came to an end in June 2021.
“However, we may have expected to see the figures falling in comparison to June this year when interest rates are rising and inflation is raging.
“To discover that this was not the case and that figures are ‘broadly’ in line with previous transactions in July is heartening. It shows that there is still an appetite to move, buy and sell and that the effect of rising mortgage rates is not the deterrent we might have expected.
“Nonetheless, there are many factors that can still affect the housing market and, as reported last week by the ONS, with real wages shrinking when held up to inflation it could be that the appetite we have been seeing is curbed. Affordability will be a defining factor and although lenders have more freedom since the affordability regulations were relaxed, common sense must prevail.”
Vikki Jefferies, proposition director at PRIMIS Mortgage Network:
“We’ve seen a 7.2% increase in the number of transactions in July compared to June 2022. It is a testament to the strength of the market that transaction figures remain healthy.
“In addition to purchase activity, there’s been a flurry of activity across the sector as homeowners are increasingly looking to remortgage in order to secure the best deals and optimise financial security in the long-term. We’ve also experienced an uptick in interest in a variety of key sectors, including buy-to-let and equity release with buyers now thinking creatively about ways to boost income.
“As the property market adapts, mortgage networks can offer brokers a broad product panel, assisting them to deliver strong and appropriate customer outcomes.”
Simon Webb, managing director of capital markets and finance at LiveMore:
“These are the highest July property transaction figures since 2015 and shows there is still demand for housing, even though it has calmed down somewhat since the end of the stamp duty holiday last September, and despite the fact that housing stock still remains low. “
“With interest rates and inflation both continuing to rise, it is a good time for home buyers to seriously consider long-term fixed rate mortgages. The certainty of knowing monthly payments won’t rise for a fixed amount of time should bring peace of mind to borrowers.”
Karl Wilkinson, CEO of Access FS:
“Whilst the year-on-year numbers may be skewed slightly thanks to the ‘Stamp Duty holiday’ last year, it is still positive to see a 7.2% increase in transactions in July compared to the month prior.
“Not only does it show appetite among house buyers even in the face of rising interest rates and a cost-of-living crisis, but it shows real resilience from brokers as they battle with longer lead times and lenders tightening their affordability criteria.
“As consumers continue to navigate this ever-changing landscape and lenders continue to adapt their strategies and product portfolios, good quality financial advice will remain absolutely vital.”
John Phillips, national operations director at Just Mortgages:
“The jump in transactions year on year of 37% is impressive but should be taken in the context of the end of the stamp duty holiday last year. What is far more telling is the growth, albeit modest of 3% from last month. “It sometimes seems like a national pastime to talk the housing market down but despite some delays in housing completions, housing transactions remain robust. There was a tiny fall in house prices last month but it’s worth noting that UK average house prices increased by 7.8% over the year to June 2022.
“With inflation predicted to hit 18%, accompanied by inevitable rises in mortgage rates lenders will of course become increasingly prudent in their lending policies but the appetite to lend remains and good quality borrowers will always be in demand.
“Feedback from our brokers across the country tells us that borrowers are very aware of the implications of a higher cost of living and are being realistic about their borrowing needs. Increased energy bills are yet to hit many households but need to be factored in to household budgets and brokers need to take a holistic approach to family finances.
“What is definitely set to increase is the speed at which products are launched and pulled by lenders and so the ‘inside’ knowledge provided by mortgage brokers is crucial to help borrowers secure the right mortgage at the right time.”
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown:
“House sales held up in July, thanks to the usual bumper summer season. However, this is a small detour for the market, rather than a change of direction. So as the summer fades, there’s every chance that the busy property market will do so too. The market tends to fluctuate, and boom in summer, but if you look at overall trends, sales have been gradually falling since the start of the year.
“July saw almost 111,000 people get the keys to their new home, with sales only slightly below the 2022 peak in March. This is particularly impressive given that homes for sale have been so thin on the ground.
“However, an awful lot of these sales will have been agreed in March and April, before we were hit by the full impact of the cost-of-living crisis. By the time we reached the summer, the market drained of available property and buyers evaporated, as sky-high energy costs, runaway inflation, rising rates and concerns that worse could be on the way sapped confidence from the market.
“The number of properties for sale has fallen again in the months since, and buyers are thinner on the ground too. The RICS residential market survey show new buyer numbers have been falling since May. They also show that existing buyers are increasingly sensitive to wider market forces, so more sales are falling through.
“We don’t expect a straight line downwards, because the property market isn’t full of mathematicians making clever calculations – it consists of humans with their own individual circumstances and motivations. However, we do expect the market to keep trending downward as we head into the autumn.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“The level of activity in the market portrays a picture of strong demand that continues in spite of elevated house price growth.
“A rush to complete in the face of climbing borrowing costs will be partly responsible for this. Buyers can sense that interest rates are only moving in one direction and the landscape for mortgage applicants could look much tighter in 12 months’ time.
“Despite fears that the rising cost of living could affect household budgets, this always takes some time to impact on the housing market. Rates are still relatively low by historic standards, and this will need to change substantially before the market shows signs of a more acute reaction to the cost of living crisis. Transacting on a property is a long-term purchase often built upon decades of borrowing.
“However, we cannot necessarily expect the level of sales to drop back to their long-term average, this is in part due to the possibility of economic pain forcing more people to put their home up for sale in the coming months. That could cause a rise in the number of homes coming to market, while sky-high rents will put a floor under demand for those who can raise a deposit.”
