HMRC says UK property transaction numbers jumped in July

Official figures showed the number of UK residential property deals increased by nearly a third year on year in July, as buyers tried to ride out rising mortgage rates.

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

That’s 32 percent higher than July last year, and a 7.2 percent increase in June 2022.

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

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

With interest rates still rising, the strong levels of activity in July could reflect, in part, buyers seeking to speed up purchases to secure lower-cost mortgage rates.

These figures show that the housing market remains stable with transactions up month-over-month, year-over-year, and well above pre-pandemic levels.

The cost of living continues to rise and we’re seeing evidence that buyers are negotiating more aggressively, driving prices down.

“But our data from member agents shows that demand remains strong and there is not enough inventory to go around 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-rate mortgage topped 4 per cent for the first time in nearly a decade, in the wake of the Bank of England’s recent hike in the base rate.

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

This is the first time that the price has breached 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 chairman, said: “As always, real estate transactions are a better gauge of market strength than more volatile prices. However, these numbers, while Positive, reflecting what has been happening for several months since the market moved.

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

“On the plus side, agreed sales are holding their levels with buyers and sellers negotiating more to ensure their move can cross the line.”

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

This imbalance has exhausted the stock market for buying. Inventory shortages and increased affordability pressures on household income are expected to dampen activity levels considerably for the remainder of the year.

Tomer Aboudi, Director of MT Finance, said that transaction levels are still relatively low and this is the main reason why real estate prices continue to rise, despite the rise in interest rates along with inflation.

With the need to stop the increase in real estate prices, higher interest rates are not the only solution. We’ve been calling for stamp duty restructuring for some time, and we’re encouraging those in larger family homes to downsize.

“We see buyers becoming more cautious than they have been in the past few years, fearful of higher costs. Borrowers are trying to hold extended flat rates, as inflation is expected to increase, which in turn will push interest rates up a lot, potentially as high as 5%. percent to 6 percent.

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

Stamp collections continued to rise, reaching £7 billion between April and July 2022, representing an increase of £1.3 billion over the same period the previous year.

HMRC also collected another £2.4bn in inheritance tax revenue in the three months to July 2022, which is almost £300m more than in the same period last year.