According to the latest figures from HMRC, seasonally adjusted estimate of residential transactions for June came to 85,870, which is 15 per cent lower than June 2022.
However, this was six per cent higher than May figures, which was the lowest level of completions since October 2021.
On a non-seasonally adjusted basis, the number of residential transactions came to 94,960, which is nine per cent down on the same period last year, but 28 per cent up on May figures.
HRMC said: “Part of the month-on-month increase in both seasonally adjusted and non-seasonally adjusted transactions across both sectors can be explained by the higher number of working days in June than in May.
“The increase may also reflect an underlying increase in activity, although it is uncertain whether this will be sustained in future months.”
Provisional estimates for seasonally-adjusted figures for 2023-2024 peg transactions at 249,920, and non-seasonally adjusted, this comes to 236,240.
This compares to the 323,000 seasonally adjusted residential transactions last year or non-seasonally adjusted 303,110.
Transactions better indicator of market ‘health’
Jeremy Leaf, North London estate agent and a former RICS residential chairman, said that residential transactions were “always a much better way of looking at the health of the property market but, of course, these figures are a little dated as they reflect activity at the beginning of the year when the market was warming up”.
He added that it was not surprising that transaction numbers were down compared to last year, but this was “very much the calm before the storm because the most recent successive increases in mortgage rates has compromised confidence”.
“As a result, we are finding we are in a bit of a two-tier market with mortgage-dependent buyers taking their time and awaiting more stability whereas the cash and equity rich are negotiating hard, trying to identify more vulnerable sellers,” Leaf said.
Gareth Lewis, managing director of property lender MT Finance, said that it was good to see a pick-up in transactions compared to May but the market would have to wait and see on the next few months figures “before we get the party poppers out”.
“As much as transactions can go up one month, they can go down the next and such fluctuations hamper the market as a whole. We need consistency so that borrowers can get their heads round what they need to pay for their mortgage, as well as where values are,” he explained.
Lewis said that the market was “still relatively flat” and would continue in the same vein due to the “inconsistent rate environment with so much volatility and products being pulled left, right and centre”.
“Until there is more stability, borrowers are unlikely to be confident about transacting,” he added.
‘Plenty of activity in the pipeline’
Vikki Jefferies, propositions director at Primis, said that fact that transaction figures are above pre-pandemic figures would “hopefully bring some confidence to the market”.
“While higher borrowing costs and the ongoing cost of living crisis clearly continue to weigh on the market, brokers are still seeing a steady stream of activity as first-time buyers and homemovers try to overcome affordability challenges,” she noted.
Jefferies added that there was also increased refinancing activity and that second-time purchasers would be “considering all of their options”.
“For example, they may consider taking out a further advance, while keeping the existing portion of their mortgage at the old rate. This could be a more suitable option than paying an early repayment charge and looking for another mortgage.
“Given there is plenty of activity in the pipeline, brokers should look to tap into sources of training and support, such as mortgage networks, which will allow them to best support consumers during this challenging period,” she said.
Stephen Perkins, managing director at Norwich-based Yellow Brick Mortgages, said that residential property transactions had fallen over the past few months because “rising mortgage rates [had] combined with people holding their breath waiting for the much-needed price correction”.
“Only those that really need to buy or move are currently doing so at the moment. On the commercial property front, we have seen plenty of enquiries, but lender appetite seems low, with many lenders raising the minimum borrowing amount and further restricting criteria. So completed transactions appear to be reduced in this sector, too.” he noted.