31 July 2023
If you are covering the UK’s monthly property transactions for June, please see the following comment from Karen Noye, mortgage expert at Quilter:
"Despite the turbulence of recent times, the UK residential property market has shown remarkable resilience. Although June 2023's residential transactions indicates a downward trend on a yearly basis The latest data on a seasonally adjusted basis show transactions were down by 15% compared to June 2022 but positively were 6% higher than May.
"This decline in transactions aligns with the growing squeeze on affordability, which is now having tangible effects on the property market. Recent indicators show that house prices were stagnant or dropped.
"Whilst it's true that June's transactions have seen a month-on-month increase, this is arguably more reflective of the high number of working days in June relative to May, and possibly an uptick in underlying activity. However, with increasing mortgage rates, the prospect of further interest rate hikes, and a growing squeeze on affordability, the outlook for the housing market remains uncertain.
"The sharp spike in mortgage rates seen in recent weeks is yet to be fully reflected in the housing market data. All this could further exacerbate affordability issues. Current homeowners may struggle to meet their growing mortgage payments, and potential first-time buyers might be deterred by high monthly repayments stifling transaction numbers..
"Moreover, the likelihood of overstretched homeowners looking to offload properties amidst dampened demand presents a worrying future picture. Fortunately, the recent Mortgage Charter is expected to provide homeowners some respite, thus reducing the possibility of a flood of distressed sales.
"The Bank of England faces a delicate balancing act. The recent lower-than-expected inflation figures might give the Bank some leeway to soften their stance on interest rate hikes, easing some pressure on the property market. But with inflation still running way above the 2% target, the Bank can't afford to be too lax. Any further increase in rates could intensify the affordability crunch and put additional pressure on property prices.
"The path ahead for the UK housing market is mired in uncertainty. Anyone looking to get into the housing market at the moment should try and get expert mortgage advice to find the most suitable product for their needs."
