HMRC’s latest property transaction figures remain stable despite ongoing economic uncertainty, but recent data suggests the sector could see a more challenging market in the second half of the year, commentators warn.
HMRC’s May numbers show seasonally adjusted residential transactions are 2% lower in May than April, falling from 100,440 to 98,450. Comparisons with 2025 are favourable, with a 17% year-on-year increase. However, the annual comparison reflects a more subdued market 12 months ago following the end of stamp duty relief.
The number of property transactions are “bang on” the five year average for May and “just shy” of the 10-year average, according to Anthony Codling, managing director at RBC Capital Markets. It’s a “business as usual market and, frankly, that’s not the worst place to be”, he added.
But with May mortgage approvals down almost 15% month-on-month and down 11% year-on-year, UK house builders will be “hoping for a Burnham building bounce”, Codling said.
Andrew Lloyd, managing director of property data firm Search Acumen, warned the numbers are evidence of “falling market confidence” translating into weaker deal flow.
“This is a negative signal for the economy, particularly as seasonal transaction levels at this time of year are typically more resilient,” he explained. “New political uncertainty tied to a new prime minister is also likely to weigh on near-term performance.
“Transaction volumes are below 100,000, showing that underlying market pressures are becoming more evident. We know transactions are taking longer to complete, so official figures often reflect conditions that have already changed, and this is a market deeply impacted by fast-changing economic sentiment.
“Affordability constraints, cost-of-living pressures and higher mortgage rates are limiting growth. Forward indicators point to further deterioration.
“The next question will be whether buyers accept that certainty isn’t forthcoming and move ahead anyway, and, if so, what the future autumn budget will look like for a government determined to shake up property taxes and leave its mark.
“Growth will come from unlocking transactions and development, which have historically responded more effectively to fiscal incentives rather than to restrictive policy measures.”
Richard Donnell, executive director at Zoopla, said the data is reflective of the state of play five or six months ago, with the latest figures showing sales completions starting to slow in May and reflecting the impact of last year’s autumn budget on sales, after Zoopla’s latest house price index reported a 15% drop in buyer demand and a 7% fall in sales agreed year-on-year.
“Looking ahead, while there is a healthy pipeline of sales from recent months, higher mortgage rates over April have hit new sales agreed which are down 7% year on year in June,” Donnell added.
“This will feed into fewer completed housing transactions which we expect to be 6-8% lower than last year compared to the 2% drop we forecast at the end of last year. There is demand to move home, but buyers have become more cautious.”
The message from estate agents is one of a nuanced outlook. Jason Tebb, president of OnTheMarket, said the property market is currently a “strong buyers market” with those ready to make a move in a “compelling position”. The four consecutive Bank of England base rate holds should have a calming effect, he added, and falling mortgage rates will assist with affordability.
Nick Leeming, chairman of Jackson-Stops, said the estate agency network saw both new listings and buyer viewings increase throughout May, reflecting growing confidence among movers. Although negotiations are taking longer than they have in recent years, “there is clear evidence that underlying demand remains resilient where homes are priced appropriately and sellers are prepared to meet the market”, he said.
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said the “familiar pre-summer push” from families who want to settle before the new school year is still evident, “but the mood is steady and selective rather than booming or stalling”.
Reynolds expects a quieter, price-sensitive summer with more activity in the autumn once buyers have more clarity on rates and the geopolitical noise has died down.
