Transaction figures show slight increase in May: HMRC

Residential property transactions in the UK increased on a monthly basis in May, according to new government figures.

On an unadjusted basis, transactions in May 2022 grew to 100,870, 1.6% higher than the previous month but 2.0% lower than May last year, according to HMRC.

Meanwhile, non-residential transactions stood at 10,250, representing a 9.7% increase from May 2021 and 0.4% more than April this year.

On a provisional seasonally adjusted basis, however, HMRC reports residential transactions at 109,210 in May, down 5.1% from May 2021 but representing an increase of 1.3% from April 2022.

Compared to pre-pandemic levels, the number of real estate transactions in May 2019 was 96,500 on a seasonally adjusted basis.

Commenting on the latest figures, Karen Noye, mortgage expert from Quilter, says: “While transactions are still higher than pre-pandemic levels, we are slowly returning to some semblance of normality because while we have seen numbers slightly higher in 2022, the number of transactions has breached 100,000 several times over the past decade.

“People have been anticipating a downturn in the housing market for months now, those hoping to get a foot on the ladder are waiting for a further drop in house prices.”

“However, so far the major global events we have been experiencing lately have had surprisingly little impact. The housing market has so far defied expectations and transactions, and house prices have remained constantly high.However, the cost of living crisis will undoubtedly be its biggest challenge yet.

Last week, the Bank of England (BoE) raised interest rates to 1.25% as it now expects inflation to hit over 11% later this year.

“Soaring inflation, rising cost of living, high energy bills set to rise further in October and minimal government support mean many people are feeling the financial strain,” says Noye.

Yesterday, the BoE also announced its intention to relax its mortgage affordability rules from August.

Noye says that while the announcement was a “shock to many given the current circumstances, the change may not be as significant as it appears because the Loan to Income (LTI) ‘flow limit’ will not be withdrawn, which has a much greater impact on people’s ability to borrow.

“Even still, this change could see an increase in interest in the real estate market in the short term,” she adds.

MT Finance Director Joshua Elash said: “It is impressive that the number of transactions fell only slightly in May last year, at a time when stamp duty exemption initiatives were encouraging a great activity. This is directly related to the underlying gap between supply and demand which has, and will continue to drive market stability and growth. »

“Equally, if not more interesting, is the fact that non-residential asset transactions are at their highest May level in nine years, as investors continue to search for value in commercial real estate as this part of the market rebounds fully after the pandemic.”

“The data shows that the market is once again weathering the raging macroeconomic storm as inflation and the cost of living crisis hit other sectors. The Bank of England’s decision to end mandatory stress testing will ensure that this trend continues in the months to come.

Meanwhile, Canopy Managing Director Chris Hutchinson comments, “First-time buyers are going to be scratching their heads about this, especially those struggling to raise the funds for a deposit.”

“With inflation showing no signs of abating, mortgages will continue to slip out of reach and drive those dreaming of home ownership out of the market. these people, especially by using their current financial habits to give them a boost.

Director of IMMO, Anna Clare Harper, explains: “Property transactions are important because they determine property prices, which reflect and affect both our confidence and the economy.

“These transaction figures make sense for two reasons: first, the desire to buy or sell is lower than at the same time last year. Second, the desire to hold on to the property is greater.

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