Residential property transactions bounced back in May as activity rose by 25% compared to April, with 81,470 completions on a seasonally adjusted basis.
According to HMRC, on a non-seasonally adjusted basis, the number of residential transactions completed in May totalled 80,530 and was 42% higher than the previous month.
HMRC said transactions peaked in March as buyers brought purchases forward to benefit from the lower stamp duty threshold, then fell in April as the tax burden changed.
Annually, transactions were 12% lower on a seasonally adjusted basis and 13% down on a non-seasonally adjusted basis.
Lower rates boosting confidence
Industry figures suggesting the recovery in residential property transactions was spurred by confidence in the lower-rate environment and people pressing on with purchase plans.
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Tony Hall, head of business development at Saffron for Intermediaries, said the data reflected a “recent boost in confidence across the housing market after last month’s interest rate cut and a steady easing of inflation”.
He added: “Many buyers who had previously paused their plans are now returning to the market, encouraged by greater mortgage choice and increased supply. This shift is helping to unlock pent-up demand and push transaction volumes higher.
“Looking ahead, there are reasons to remain optimistic. Although interest rates were held at 4.25% last Thursday, the government’s £39bn pledge to boost affordable housing – announced in the Chancellor’s Spending Review earlier this month – will be welcome news for many. It signals that long-term housing challenges are being taken seriously, and with summer demand building and more homes coming to market, conditions are gradually shifting in buyers’ favour as we move into the second half of the year.”
Hamza Behzad, business development director at Finova, said: “Today’s increase is optimistic news for the housing market. Although overall transaction volumes did not match the heady highs of March – when millions of buyers rushed against the clock to meet the stamp duty threshold deadline – actual activity in the UK property market is still robust. This is a positive sign, but consumers should still take care in this evolving market. The base rate has clung to 4.25%, which may affect mortgage product availability and lead some aspiring buyers to postpone their home-owning dreams.
“Nonetheless, the market is still rife with high loan-to-value (LTV) options, which will only ramp up competition and create windows of opportunity for buyers of all ages to step onto the property ladder. But lenders must continue to invest in innovative technology to deliver more efficient decisions and faster product-to-market times. The ability to scale and react at speed will be key to success in today’s dynamic market.”
Jeremy Leaf, North London estate agent and a former Royal Institution of Chartered Surveyors (RICS) residential chair, said the market had “lost some steam” due to the moves brought forward, but said it was “not all gloom and doom as sales agreed numbers are rising and prices softening a little, bearing in mind the considerable increase in stock”.
Leaf said buyers “definitely [have] a reluctance to overstretch financially in view of economic uncertainty at home and abroad, which looking forward is unlikely to change too much in the next few months.”
Although transactions were up on a monthly basis, some noted that activity had not returned to levels seen last year.
Andrew Lloyd, managing director at Search Acumen, said: “It’s encouraging to see an uptick in activity following April’s fall in transactions, but the reality is market performance remains underwhelming when compared to last year.
“Our analysis of HM Land Registry data showed total transactions in Q1 were only 1.1% higher than last year, but this modest growth was offset following the recent drop in deal volume.”
He added: “We’re now at a pivotal juncture. Positive signals from the government, following the Spending Review and 10-Year Infrastructure Strategy, combined with promising increases in capital and rent values, have the potential to ensure investor confidence in the UK’s real estate ecosystem does not dwindle.
“One improvement that could turbocharge the sector, and drive momentum, is embedding digital tools and methods into the heart of transaction processes. By harnessing AI-powered automation, property deals can be smoother and more cost-efficient than ever before.”