June property market washout, but the sun has started to shine again
- Property sales (seasonally adjusted) were 91,370 in June. That’s up 8% from a year earlier, but down very fractionally (less than 1%) from May – bringing an end to the run of five monthly rises.
- This is fairly low for June. Over the past decade, June sales have averaged 104,957.
HMRC has released details of property transactions in June: UK monthly property transactions commentary – GOV.UK (www.gov.uk)
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“June was a bit of a washout for the property market, reflecting the fact that sales were agreed when mortgage rates were gradually climbing earlier this year. For most of the period since, they’ve edged higher, and the Bank of England shows mortgage approvals have suffered. It means sales could look decidedly lacklustre in the coming months.
Property sales completed in May were likely to have been agreed from around the beginning of March. At the start of that month, the average 2-year fixed-rate mortgage was 5.76%, according to Moneyfacts. This was up from 5.56% a month earlier, and was just the start of a slow ascent of mortgage rates. Buyer enthusiasm that had been sparked at the start of the year started to tail off in the face of higher costs.
For most of the time since, things have got even tougher, with the average 2-year fixed-rate hitting a short-term peak of 5.97% at the end of June, according to Moneyfacts. As a result, buyer numbers have struggled. Meanwhile, more properties on the market have made life harder for sellers too, and the arrival of the summer holiday season has given potential buyers other priorities.
Hotter autumn
There’s some better news on the way. The average 2-year fixed-rate mortgage is down from 5.97% at the end of June to 5.78% today. And this is unlikely to be the end of it. When we eventually get a rate cut from the Bank of England, we won’t see a massive overnight shift, but cuts during the past few months of the year will keep rates gently trending downwards.
It may not take major mortgage rate changes to spark more interest from buyers. Sentiment plays an enormous role in this market, and the moment when rates are first cut is likely to provide a boost for buyers regardless. The fact that estate agents have so many more properties on their books means there are homes available for them to buy, so we’re likely to see that demand translate quickly into sales.
It has been incredibly difficult to get onto the property ladder since prices and mortgage rates have surged, but there is new hope for buyers, and the HL Savings & Resilience Barometer report in July revealed that the move will eventually pay off. Despite the rises in mortgage rates, the fact that rents have risen so much means that when people become homeowners, the pressure on their finances tends to ease. It means they have an average of £363 left at the end of the month – compared to renters who have just £79 – which means you can spend less on keeping a roof over your head and more on making it a nice place to be.”
