In a recent report released by HM Revenue and Customs (HMRC), the housing market in the United Kingdom experienced a 16% decline in home sales for the month of July compared to the same period in the previous year. The figures, although showing a drop in sales, indicate some signs of stability as the market recorded a marginal 1% increase in residential property transactions compared to the preceding month, June.
July marked the second consecutive month of a minor uptick in property transactions, according to HMRC. However, it’s important to note that these figures reflect sales completions, which typically occur two to four months after the initial offer on a property.
The recent surge in mortgage rates, attributed to a series of base rate hikes by the Bank of England in response to rising inflation, has influenced the housing market’s performance. Nevertheless, there have been recent indications that fixed mortgage rates have started to stabilize.
A report from the Bank of England published on Wednesday revealed that mortgage approvals for home buyers fell by nearly 10% between June and July. Specifically, there were 49,444 approvals in July, down from 54,605 in June, as outlined in the Bank’s Money and Credit report.
James Bull, a mortgage broker at JB Mortgages in Huddersfield, commented on the situation, stating, “Throughout the year, the purchase market has really slowed as the impact of higher mortgage rates has kicked in. Clearly, there are regional variations, but the one constant is that only realistically priced properties will sell.”
Nigel Bishop, representing buying agency Recoco Property Search, noted, “The current market is particularly driven by cash buyers who are not deterred by higher interest rates. However, we have seen some house hunters adjusting their budget or search criteria to find a suitable property.”
Nicky Stevenson, managing director at estate agent group Fine & Country, provided insight into the market’s dynamics, saying, “Property transactions were stable in July, rising slightly compared to June on a seasonally adjusted basis. Affordability pressures caused by successive base rate rises are squeezing demand compared to last year, but the housing market is proving resilient.”
Stevenson emphasized that sensibly priced properties continue to attract substantial interest, while smaller homes in affordable locations remain popular. She expressed optimism about the future, stating, “Hopefully, we are soon reaching the point where the Bank of England can take a step back from interest rate hikes and let the economy recover of its own accord without needing to pull another lever.”
Gareth Lewis, managing director of property lender MT Finance, shared his perspective, highlighting the hesitancy in the market due to uncertainties surrounding interest rates and property values, stating, “There is some hesitancy as to whether now is a good time to buy while there is uncertainty as to where interest rates will peak and what will happen with property values.”
Alex Lyle, director of London-based estate agency Antony Roberts, addressed the current state of viewings and property sales, saying, “A combination of the summer holiday season and buyers being more cautious has resulted in fewer viewings. Having said that, the recent volume of agreed sales has been reassuring.”
Lyle added that properties in prime locations, especially family houses, continue to attract significant interest and achieve strong prices. However, properties with location, lease, or layout challenges are taking longer to sell and need competitive pricing strategies.
The housing market’s performance in the coming months will likely be closely tied to the evolving economic and interest rate landscape, with buyers and sellers adjusting their strategies accordingly.