House sales fell by 15% in June compared with the same month a year earlier, according to HM Revenue and Customs (HMRC) figures.
An estimated 85,870 transactions took place in June 2023 across the UK, which was 6% higher than in May this year.
Apart from June 2020, when the market was hit by the impacts of the coronavirus pandemic and there were just 63,630 transactions, June 2023 was the slowest June for house sales seen over the past decade.
The report said that part of the month-on-month increase can be explained by a higher number of working days in June than in May.
It added: “The increase may also reflect an underlying increase in activity, although it is uncertain whether this will be sustained in future months.”
We are finding we are in a bit of a two-tier market with mortgage-dependent buyers taking their time and awaiting more stability whereas the cash and equity rich are negotiating hard, trying to identify more vulnerable sellers— Jeremy Leaf, north London estate agent
Sarah Coles, head of personal finance, Hargreaves Lansdown said: “Higher transactions in June came courtesy of slightly more working days and the easing of mortgage rates back when these sales were agreed. We may well see more sales again in July, but after that, today’s higher mortgage rates are likely to hit hard.”
Nick Leeming, chairman of Jackson-Stops said: “In order to ensure that property purchases are not unnecessarily delayed, it’s important that homes are fairly priced in line with real market standards rather than sold prices which have since moved.”
Iain McKenzie, chief executive of the Guild of Property Professionals, said: “In the face of high interest rates and a dearth of competitive mortgage offers, the number of property sales is returning to growth.
“There is now some light at the end of the tunnel for the market following a slow start to the year.
“While the annual picture shows a fall of 15%, keep in mind that this time last year was a feeding frenzy to get hold of any available properties.”
Jeremy Leaf, a north London estate agent said: “We are finding we are in a bit of a two-tier market with mortgage-dependent buyers taking their time and awaiting more stability whereas the cash and equity rich are negotiating hard, trying to identify more vulnerable sellers.”
Nicky Stevenson, managing director at estate agent group Fine & Country said the recent slowing inflation “is also raising hopes that the Bank of England can slow down its interest rate hikes, which will bring much more stability to the mortgage market”.
More pain will build in the system as fixed-rate mortgages continue to be renewed at higher rates— Chris Druce, Knight Frank
Riz Malik, director of Southend-on-Sea-based mortgage broker R3 Mortgages said: “This week, some lenders have started to lower their mortgage rates marginally due to favourable market conditions.
“So, even if the (Bank of England) base rate goes up next week, if the expectation is that interest rates won’t go much higher, we could start to see an increase in property transactions if the cost of borrowing improves.”
Chris Druce, senior research analyst at Knight Frank, said: “Growing expectations that we may be nearing the peak for interest rates as inflation slows will help to settle buyers’ frayed nerves, but the affordability challenge will remain, and despite this month’s increase in transactions it’s unlikely we’ll see a dramatic turnaround in overall sales volumes this year.
“However, strong wage growth and high employment, along with forbearance from lenders and the availability of longer fixed-rate mortgage terms, is the reason activity is moderating overall rather than stopping.
“More pain will build in the system as fixed-rate mortgages continue to be renewed at higher rates, with the higher cost of borrowing acting as a drag on the UK property market through the rest of 2023 and into next year.”
