Property sales in June saw a modest rise of 6% compared to May, reaching 85,870, which is a 15% decrease from a year earlier. While this rise represents a glimmer of positive activity, experts warn that it is more likely a brief respite rather than a sign of sustained recovery in the housing market.
One reason for the increase is that June had more working days than May. However, this still marks the slowest June for property sales in a decade, excluding the closure period of June 2020 due to the pandemic.
Sarah Coles, head of personal finance at Hargreaves Lansdown, provided a clear warning regarding the apparent rise: “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.”
Coles noted that the June figures reflect buyer sentiment from March when mortgage rates were more favourable. Though these rates continued to fall through April, they have since risen gradually, pushing fixed rates above 6.8% for two-year terms and 5-year rates over 6.3%. Zoopla data shows this has led to a fall in demand by a fifth in the past two months.
She added: “We can’t applaud the end of the sales slump, because the second act is about to start. It means that when we get sales figures for the Autumn, we can expect some significant drops.”
Yet, there are signs that major lenders are beginning to reduce their mortgage rates, with average rates showing recent declines. Coles acknowledges this as “a welcome easing for the market,” but whether it’s enough to halt the slide in property sales remains uncertain.
Nicholas Finn, Executive Director of Garrington Property Finders, shared a similar sentiment, expressing that June’s increase in home sales is a “welcome surprise” but cautiously adding: “It’s too early to call if this is a fluke or a fillip for the property market.”
Finn pointed out that with property prices decreasing in many UK regions, some sellers are pausing their plans, affecting the number of homes being sold. He explained that those who need to sell are opting to reduce prices early, which has led to June’s uptick in completed sales.
According to Finn, these sellers’ approach creates “a cycle of gradually falling prices and thus strong buying opportunities for strategic buyers.” He also mentioned the recent trimming of mortgage interest rates by high street lenders, adding that the easing of borrowing costs in the latter half of 2023 might encourage first-time buyers and “second-steppers” to return to the market.
While the June figures present a temporary boost in a market marred by a slow decline, both analysts suggest caution. The gradual softening of mortgage rates and pragmatic pricing by sellers might provide opportunities, but the overall prognosis appears to indicate that the UK property market’s downturn is set to continue, rather than reaching a turning point.
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)