Today’s latest transaction data from the government unveils notable shifts in the UK’s property market dynamics for July 2023.
The provisional non-seasonally adjusted figures indicate that there were 86,190 residential transactions in July, marking a 22% drop from the same month in the previous year and a 9% decrease from June 2023. Meanwhile, seasonally adjusted estimates present a figure of 86,510 residential transactions for July 2023, which is 16% lower than July 2022 but 1% above June 2023’s figures.
For non-residential transactions, the non-seasonally adjusted estimate for July stands at 9,340, representing a decline of 9% year-on-year and an 8% dip from the previous month. However, the seasonally adjusted estimate for non-residential deals is slightly higher at 9,770, which is still 6% lower than July 2022, though it marks a 3% uptick from June 2023.
Highlighting the current market situation, the report states: “July is the second consecutive month in which we have seen a small increase in seasonally adjusted transaction figures.” It further elaborates that while seasonally adjusted residential transactions increased by 1% in comparison to June, the non-residential ones saw a 3% rise. Yet, when juxtaposed against July 2022 data, both residential and non-residential seasonally adjusted transactions plummeted by 16% and 6%, respectively. Non-seasonally adjusted data paints a similar picture of decline, with residential transactions down by 9% since June and non-residential ones decreasing by 8%.
Terry Woodley, MD of Development Finance at Shawbrook, commented:
“A muted month for property transactions as high mortgage rates and sticky inflation take their toll on the market.
With demand inevitably following suit, property developers need to be vigilant to increased difficulty in turning projects over and may need to adjust their prices to attract buyers.
Whilst a decrease in property transactions may be challenging, it can also present opportunities. For example, developing property for rental purposes could provide a more stable income stream during periods of reduced sales activity. Either way, developers will need to adapt their strategies to suit the changing market conditions. This could involve diversifying their portfolio, exploring new geographic areas, or targeting different types of properties, such as houses of multiple occupation (HMOs), build to rent or student accommodation.”
Nicky Stevenson, Managing Director at national estate agent group Fine & Country, commented:
“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.
Buyers have become used to the higher-rate lending environment, and many sellers are pricing their properties accordingly. Sensibly priced properties continue to attract a lot of interest, while smaller homes in affordable locations are proving the most popular.
A pause in base rate rises would stabilise mortgages and inject even more confidence into the property market.
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.”
Iain McKenzie, CEO of The Guild of Property Professionals, commented:
“A modest month on month rise in property transactions shows there are still signs of vitality in the housing market following a slow first half of the year.
Estate agents have been using this downtime to replenish their housing stock, and the fruits of their labour are beginning to show.
The annual picture shows a drop off in sales of 16%, so while there is some light at the end of the tunnel for the industry, we may see an overall fall of approximately 20% for 2023.
House prices are coming down, albeit not at the speed that was predicted at the start of the year, and this is also affecting the sales we are seeing on the ground among our members.
Sellers can be reassured that their home is still worth significantly more than pre-pandemic levels.”