Residential transactions rise causing optimism in UK market
Cornerstone discusses HMRC property transactions, showing residential transactions rise 28% between May and June, which is causing optimism in UK market.
The UK property market has demonstrated significant resilience in the face of external pressures, according to the latest data from HMRC. The total number of residential property transactions reached 94,690 in June, a robust increase of 28% compared to May.
However, there was a 9% decrease when compared to June of the previous year. When seasonally adjusted, the transactions reached 85,870 – a slight decrease of 15% from the same period in 2022, but still demonstrating a promising rise of 6% over May 2023.
Despite the complexities brought about by soaring mortgage rates and softer buyer demand, David Hannah, Group Chairman at Cornerstone Group International – the UK’s leading property tax experts – asserts that the property market’s resilience is evident.
In particular, he highlights indications that future transaction levels may remain stable, buoyed by recent falls in inflation and hopes for slower interest rate hikes by the Bank of England.
Despite borrowing costs reaching their highest since 2008, strong wage growth, high employment rates, lender forbearance, and the availability of long-term fixed-rate mortgage terms have collectively supported the market.
The property transaction numbers, considered a reliable indicator of the market’s health, have subsequently shown a steady return to pre-pandemic levels. Sellers who price their properties realistically are now expected to successfully complete transactions in the coming months.
Some sellers are already adopting this strategy, initiating a cycle of gradually falling prices, which in turn presents attractive buying opportunities for strategic buyers focused on long-term value.
As major high street lenders initiate reductions in mortgage interest rates, the second half of 2023 may provide more optimism for the UK property market. The potential easing of borrowing costs could encourage more first-time buyers and those moving up the property ladder to capitalise on lower prices.
David Hannah, Group Chairman of Cornerstone Group International, discusses what we can expect from the market in H2 of 2023:
“The UK property market is undoubtedly facing several challenges.
“However, taking into account historical patterns and economic indicators, we believe that a genuine housing crisis is unlikely.
“Despite higher mortgage rates and declines in property prices, we anticipate the market to demonstrate the same resilience as witnessed in recent years as we move into H2 of this year.
“It is encouraging to see that property transactions were up 28% between May and June of this year, now mirroring pre-pandemic demand levels.
“It is important to remember that the UK property market is not solely dictated by interest rates; it is also strongly influenced by the resilience of the labour market and longer-term issues like the structural housing shortage.
“As we look ahead to the second half of the year, we expect the easing of borrowing costs to catalyse a resurgence of activity.
“This is particularly so for first-time buyers and those looking to step up on the property ladder.”
Kindly shared by Cornerstone
Main article photo courtesy of Pixabay
