New data from HM Revenue & Customs has revealed the number of UK residential property transactions in June 2023 was 9% lower than the same month in 2022.
The 94,690 transactions seen last month was 28% higher than the previous month of May 2023 on a non-seasonally adjusted basis.
Looking at the same data on a seasonally adjusted basis, HMRC said transactions were down 15% year-on-year and 6% higher month-on-month.
Sarah Coles, head of personal finance, Hargreaves Lansdown, describes the new data as an “interval” and not the “end of the show”. She added:
“Higher transactions in June came courtesy of slightly more working days and the easing of mortgage rates back when these sales were agreed. We may well see more sales again in July, but after that, today’s higher mortgage rates are likely to hit hard. We can’t applaud the end of the sales slump, because the second act is about to start.”
Rates continued to fall slowly through April – so July’s figures may look reasonably healthy too. However, in the months since, they’ve risen gradually and then rapidly, pushing 2-year fixed rates above 6.8% and 5-year rates over 6.3%. This has taken a massive toll on demand, which Zoopla figures show has fallen a fifth in the past two months. It means that when we get sales figures for the Autumn, we can expect some significant drops.”
In a report authored by Landmark Information Group, Why are property transactions taking so long?, it’s revealed that the average time from instruction to completion on a purchase in 2022 was 133 days.
In 2019, this figure stood at just 104 days. Even more striking is that the process took just 75 days on average in 2007, which has since increased by 77%.
Similar figures are presented regarding the timeline between instruction and exchange: the 119-day wait in 2022 was 80% higher than the 66 days it took in 2007 and 29% higher than the time taken in 2019.
What’s more, on the new data, Sarah also states that it is “not all bad news”. She said:
“In the last few days, Moneyfacts figures show that average mortgage rates have started falling, and some major lenders have started to cut their rates. We’re not heading back to an era of super-low rates just yet, but it’s a welcome easing for the market. It remains to be seen whether this is enough to halt the slide, or whether the decline in property sales is set for an encore.”
Also, on a more positive note, Adam Oldfield, chief revenue officer at Phoebus Software said that we have to “take encouragement” from the non-seasonally adjusted figures from HMRC. He added:
“Although lower than in 2022 the uplift from the number of transactions in May shows a level of confidence returning. Most of these transactions have been in the pipleline for over three months, a time when the hikes in interest rates coupled with the highest inflation for years could have caused a serious lack of confidence. It appears that despite everything the need to move has outweighed these negatives.”
Andy Sommerville, Director at Search Acumen, said:
“There is no doubt the housing market is slowing down from a frenzied pace post-pandemic, however if the current trend continues, this will impact all economies related to the built environment which is no good for anyone. The government, banks and lenders, all need to work together to support the stability of the market to benefit the entire UK economy.
This down period, before hopefully a slow building recovery over the next few years, is a fantastic time to consider the improvements that can be made to the property sector. It is time for all players in the transaction journey to realise the impact that a digital-first approach to processes could have on the industry as a whole – saving time and making efficiencies that help all parties involved. For buyers and sellers, faster transactions lessen the risk of fall-throughs and collapsing chains. For lawyers, using technology-driven tools will enable them to service clients faster, meet their widening needs and expectations, whilst ready to take on more clients as market activity picks up.”
