UK property transaction numbers jumped in July, HMRC says

The number of UK residential property transactions increased nearly a third year-on-year in July as buyers tried to outpace mortgage rate rises, official figures show. 

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

This is 32 per cent higher than July last year, and a 7.2 per cent increase on June 2022.

Seasonally adjusted, residential transactions reached 104,470 in July, which is 36.7 per cent more than last year.

Mortgage interest rates have risen rapidly as the Bank of England has tightened monetary policy over the last few months. 

With rates continuing to climb, stronger levels of activity in July could, in part, reflect buyers’ quest to accelerate purchases to lock in lower cost mortgage rates.

Nathan Emerson, the boss of estate agent membership body Propertymark, said: ‘These figures show the housing market remains stable with transactions up month-on-month, year-on-year and well above pre-pandemic levels.

‘The cost of living is still rising and we are seeing evidence of buyers negotiating harder, bringing price increases down. 

‘But our data from member agents shows the demand remains strong and that there with not enough stock to go round with the number of new potential buyers seven times higher than new homes coming to the market.’

The average interest rate on a two-year fixed mortgage has exceeded 4 per cent for the first time in almost a decade, following the Bank of England’s latest base rate hike.

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

It marks the first time the rate has breached 4 per cent since February 2013 when it hit 4.09 per cent.    

Commenting on today’s HMRC data, Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: ‘As always, property transactions are a better barometer of market strength than more volatile prices. However, these figures, though positive, reflect what was happening several months ago since when the market has moved on.

‘On the ground, we are finding demand is still there but concerns about the rising cost of living and interest rates are prompting a more cautious approach which is reducing numbers and increasing the length and reducing the number of sales.

‘On the plus side, sales agreed are maintaining their levels with buyers and sellers negotiating harder to ensure their move can get over the line.’

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

‘That imbalance has depleted the market of stock to buy. Lack of stock and increased affordability pressures on household incomes are expected to substantially ease levels of activity for the remainder of the year.’

MT Finance director Tomer Aboody, said: ‘Transaction levels are still relatively low which is the main reason that property prices remain high, even though interest rates are going up along with inflation.

‘With the need to stem the increase in property pricing, higher interest rates are not the only solution. We have been calling for a restructure of stamp duty for some time, encouraging those in bigger family homes to downsize.

‘We are seeing buyers becoming more cautious than in the past few years, fearing rising costs. Borrowers are trying to lock into an extended fixed rate, as inflation is predicted to increase which in turn will push rates much higher, potentially as high as 5 per cent to 6 per cent.’

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

Stamp duty takings continue to soar, reaching £7billion between April and July 2022, representing an increase of £1.3billion on the same period in the previous year.

HMRC also raked in another £2.4billion in inheritance tax receipts in the three months to July 2022, which is about £300million more than in the same period last year.