UK property transaction numbers rose in July, says HMRC

The number of UK residential property transactions rose by almost a third year-on-year in July as buyers sought to outpace mortgage rate hikes, official figures show.

On a non-seasonally adjusted basis, total transactions amounted to 110,970 according to HM Revenue & Customs.

This is 32 percent more than July of last year and an increase of 7.2 percent on June 2022.

Seasonally adjusted residential transactions reached 104,470 in July, up 36.7 percent from last year.

On the rise: Number of UK residential property transactions increased in July

Mortgage interest rates have risen rapidly as the Bank of England has tightened monetary policy in recent months.

As rates continue to rise, the stronger levels of activity in July could, in part, reflect buyers seeking to speed up purchases to secure lower-cost mortgage rates.

Nathan Emerson, head of estate agent membership body Propertymark, said: “These figures show the housing market is holding steady with transactions increasing month-on-month, year-on-year and well above pre-pandemic levels. “.

‘The cost of living continues to rise and we are seeing evidence that buyers are negotiating more, which reduces price increases.

“But our data from member brokers shows that demand remains strong and there isn’t enough inventory to go around with the number of potential new buyers seven times the number of new homes coming on the market.”

Changes: A graph showing the fluctuating levels of residential transactions since July 2019

Changes: A graph showing the fluctuating levels of residential transactions since July 2019

Looking back: A chart showing UK residential property transaction figures since July 2005

Looking back: A chart showing UK residential property transaction figures since July 2005

The average interest rate on a two-year fixed mortgage topped 4 percent for the first time in nearly a decade, following the Bank of England’s latest base rate hike.

An average two-year fixed-rate mortgage is now at 4.09 percent, according to Moneyfacts: 62.3 percent more expensive than in the same period last year when it was 2.52 percent.

It is the first time that the rate has exceeded 4 percent since February 2013, when it reached 4.09 percent.

Commenting on today’s HMRC data, Jeremy Leaf, North London estate agent and former RICS Residential Chairman, said: ‘As always, property transactions are a better barometer of market strength than more volatile prices. However, these numbers, while positive, reflect what was happening several months after the market moved.

“On the ground, we find that demand is still there, but concerns about rising cost of living and interest rates are driving a more cautious approach that is lowering the numbers and increasing the duration and reducing the number of sales.

“On the bright side, agreed sales are holding their levels with buyers and sellers trading further to ensure their move can break the line.”

Lawrence Bowles, director of research at Savills, said: “The supply of homes on the market has been below pre-pandemic levels since April 2021, while the number of agreed sales has exceeded the pre-pandemic average since July 2020”.

‘That imbalance has exhausted the market for shares to buy. Stock-outs and increased affordability pressures on household income are expected to substantially reduce activity levels for the remainder of the year.’

Competition: The supply of housing on the market is currently low but the demand is strong, according to experts

Competition: The supply of housing on the market is currently low but the demand is strong, according to experts

MT CFO Tomer Aboody said: ‘Transaction levels remain relatively low, which is the main reason property prices remain high, even though interest rates are rising along with with inflation.

‘With the need to stop the rise in property prices, higher interest rates are not the only solution. We have been calling for a stamp duty restructuring for some time, encouraging those in larger family households to downsize.

“We are seeing buyers become more cautious than in recent years, fearing rising costs. Borrowers are trying to lock in an extended fixed rate as inflation is expected to rise, which in turn will drive rates much higher, potentially as much as 5-6%.’

Recent separate figures released by HMRC revealed another significant increase in the amount of tax received by the Treasury from property owners and other property owners.

Stamp duty collection continues to rise, reaching £7bn between April and July 2022, an increase of £1.3bn on the same period last year.

HMRC also collected a further £2.4bn in inheritance tax receipts in the three months to July 2022, which is around £300m more than the same period last year.

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