HM Revenue & Customs’ provisional non-seasonally adjusted estimates showed there were 96,290 residential transactions in the month - 3.1 per cent lower than the previous month, while non-residential transactions were down 9.5 per cent from May with 8,850 transactions in June.
The non-residential transactions figures showed a yearly decrease of almost a quarter from the same period last year (24.3 per cent.)
The large annual drop is largely due to transactions in June 2021 being the final month homebuyers could make major savings on stamp duty tax.
From July 1 2021, individuals paid no stamp duty on the first £250,000 of a property, but before this the threshold was set at £500,000.
Cautious buyers
However, experts said the monthly decrease showed the strain prospective buyers are under amidst the cost of living crisis, as interest rates continue to rise and high inflation bites.
Primis Mortgage Network’s proposition director, Vikki Jefferies said this meant the market has become increasingly complex with fewer people buying properties.
“As a result, the market is slowing down after the initial increase in activity at the start of the year,” she said.
Coreco’s managing director Andrew Montlake warned the month-on-month slow down is a sign of things to come.
He said: “The slowdown in transactions compared to May this year is likely to be a sign of things to come as people become increasingly cautious as rates rise and the cost of living crisis bites.
“But for now at least, the jobs market remains strong and that will ensure transactions don't go off a cliff.”
Similarly, Samuel Mather-Holgate of Swindon-based Mather & Murray Financial said it was likely residential property transactions will continue to decline until the broader economic picture starts to improve.
“The current level of inflation is likely to trigger a recession, which will clearly temper transaction levels. The residential property market is driven by sentiment and recessions hit sentiment — and transaction levels — hard,” Mather-Holgate warned.
However, others were more optimistic about the figures.
Mortgage broker SPF Private Clients’ chief executive Mark Harris said there are still signs of strong activity in the market “even though some of the heat has come out of it.”
"With another rate rise on the cards next month, this is focusing the mind of borrowers who are keen to secure a fixed rate mortgage before pricing edges higher,” he said.
Chestertons’ managing director Richard Davies, said the firms' branches have seen a “growing buyer demand” with a 47 per cent jump in buyer enquiries compared to June last year.
Davies predicts that the micro markets of central London will become particularly competitive as some of Chestertons’ local offices have noticed a gradual return of buy-to-let investors “who are lured back into the market by rising rents and the potential of higher profits”.
Lack of supply
Hargreaves Lansdown’s senior personal finance analyst, Sarah Coles pointed to the fact these are the lowest figures for June in nine years and said that “miserable” housing stock levels are responsible.
“This is meant to be bumper house buying season, but sales have started drying up. Aside from a low point early in the pandemic, we haven’t seen a June this slow in nine years. The monthly movements are starting to add up to a general downwards trend,” she said.
“Rightmove figures show that despite a shift in the balance of supply and demand, we still have a quarter more buyers than the same time in 2019 and 40 per cent fewer sellers, so plenty of keen buyers are still being thwarted by miserable stock levels.
“However, we’re also seeing signs that buyers are getting cold feet. Demand has fallen, and those buyers who are still looking are increasingly cautious. We’re seeing fewer bidding wars, more sales falling through as buyers push for a price drop and at the higher end of the market more people are having to accept a lower offer. These aren’t enormous shifts, but again, the overall trend is telling.
“We expect sales to continue to tail off as we go through the year, it won’t be a straight line, but our zig zagging property sales figures aren’t heading in a particularly positive direction.”
jane.matthews@ft.com
