Transaction levels were flat compared to the month before, data from HMRC showed, with just a one per cent uptick on June.
On a non-seasonally adjusted basis, there were 86,190 residential transactions. This was a 22 per cent annual decline and a nine per cent monthly decrease.
Some buyers continuing as normal
Kay Westgarth, sales director at Standard Life Home Finance, said the annual decline was “to be expected” but the “robust nature” of the monthly figures showed that while interest rates had created caution among some buyers, “others are continuing as planned”.
She added: “The future is never certain but, as the market relaxes from the recent turbulence, transactions are likely to continue climbing even though the usual summer house-buying rush typically ends in September.
“While some new and existing homeowners are pushing ahead with their plans, there are others who will be debating what the 14 consecutive base rate increases mean for their financial security.”
Nicky Stevenson, managing director at Fine and Country, said affordability pressures were “squeezing demand” but the market was “proving resilient”.
She said: “Buyers have become used to the higher-rate lending environment, and many sellers are pricing their properties accordingly. Sensibly priced properties continue to attract a lot of interest, while smaller homes in affordable locations are proving the most popular.”
Thora Kehoe, chief product officer at Smartr365, added: “The UK’s relationship with homeownership remains incredibly strong and as such, many buyers are making sacrifices elsewhere to keep their purchase plans alive. Demand is currently driven by first-time buyers using this period of correcting house price inflation to snap up cut-price pads.
“Remortgage and product transfer activity also continue to dominate, and I expect this will remain the case for the rest of the year.”
Nick Leeming, chairman of Jackson-Stops, suggested that it was not just people who were buying with a mortgage that were active in the market.
He said: “Cash buyers and right sizers have both benefited from strong house price growth in recent years and are now able to make their moves relatively unaffected by a temperamental lending environment.”
A slower market
However, James Bull, senior mortgage broker at JB Mortgages, said the property market was a “shadow of what it was last year”.
“The fact that transactions in July 2023 were down sharply compared to July last year says all you need to know about where the market is at. Throughout the year, the purchase market has really slowed as the impact of higher mortgage rates has kicked in.
“The one thing supporting prices and favouring sellers, if only marginally, is the lack of supply. Many existing homeowners see this as a bad time to sell a house so there are not enough properties for sale to meet the demand,” he added.
Imran Khan, co-founder of PropertyLoop, agreed and said: “2022 feels like a decade ago compared to where the market is at now. Demand is noticeably weaker and this is feeding through into lower transaction levels.
“Transactions are still happening, as reflected in the slight uptick on June, but the market remains vulnerable. Vendors now know that realistic pricing is no longer optional but a necessity to close deals.”
Pick-up on the horizon?
Kevin Roberts, managing director at Legal and General Mortgage Services, predicted that activity in the market would soon pick up.
He said: “We expect this pause in activity will likely be short-lived as a more stable market shapes new norms, encouraging buyers to make a move onto or up the housing ladder, and existing borrowers to remortgage as their deals expire.
“As activity picks up, many will need ample reassurance that they are making the right choices about their mortgage, as well as those gifting to loved ones as part of the Bank of Family. In these challenging times, nobody has a ‘crystal ball’, but advisers have a golden opportunity to add value by offering professional guidance to help their customers make informed decisions.”
