Property sales (seasonally adjusted) in June were 15% lower than a year earlier, at 85,870, but 6% higher than May. Part of the monthly rise was down to the fact there were more working days in June than May. Aside from when the market was effectively shut in June 2020, it’s the slowest June in a decade.
HMRC has released details of property transactions in June: Monthly property transactions completed in the UK with value of £40,000 or above – GOV.UK (www.gov.uk)
Sarah Coles, head of personal finance, Hargreaves Lansdown said: “This is an interval, not the end of the show. Property sales may have picked up slightly in June, but we can expect the decline to kick off again in a couple of months. 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.
“Sales were up 6% between May and June. However, it’s worth bearing in mind this was from a very low base, and when you compare it to a year earlier, they were actually down 15%. Aside from the early pandemic, it’s the slowest June in a decade, so this is a small bump in an overall decline.
“Given that it takes around three months from agreeing a sale to completing, these figures reflect buyer sentiment in March. Back then, mortgage rates had eased off significantly from the mini-budget spike, and according to Moneyfacts, the average 2-year fix was around 5.3% and the average 5-year fix around 5%. 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.
“It’s not all bad news though. 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.”