July 'busiest month of 2022 for sales amid rush to beat rate rises’

July was the most active month for home sales so far this year but agents acknowledge that a slowdown is coming.

The latest property transaction statistics from HMRC show residential transactions were up 32.9% annually and 7.2% on a monthly non-seasonally adjusted basis to 110,970.

The provisional seasonally adjusted estimate of UK residential transactions in July 2022 was 104,470, 36.7% higher than July 2021 and 3.2% higher than June 2022.

HMRC data shows it is the busiest July for transactions since 2015 and for so far this year, albeit compared with last year’s stamp duty rush.

Some agents acknowledge that the spike is a reflection of sales that have completed as buyers rush to secure mortgages and transactions before interest rates rise further amid the cost of living crisis.

Lawrence Bowles, director of research at Savills, said: “Mortgage interest rates have risen rapidly as the Bank of England has tightened monetary policy over the last few months. With rates continuing to increase, stronger levels of activity in July will in part be reflected by buyers accelerating their buying process to lock in lower costs of mortgage debt.

“The supply of homes onto the market has been below pre-pandemic levels since April 2021, while the number of sales agreed has exceeded the pre-pandemic average since July 2020.

“That imbalance has depleted the market of stock to buy. Lack of stock and increased affordability pressures on household incomes are expected to substantially ease levels of activity for the remainder of the year.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “As always, property transactions are a better barometer of market strength than more volatile prices. However, these figures, though positive, reflect what was happening several months ago since when the market has moved on.

“On the ground, we are finding demand is still there but concerns about the rising cost of living and interest rates are prompting a more cautious approach which is reducing numbers and increasing the length and reducing the number of sales.

“On the plus side, sales agreed are maintaining their levels with buyers and sellers negotiating harder to ensure their move can get over the line.”

Other agents were more optimistic.

Richard Davies, managing director of Chestertons, said: “We have seen a clear uplift in the number of viewings and the number of buyers registering with our branches in July. 

“This increase in market activity suggests that, despite economic challenges and the changes to mortgage rules, buyer appetite remains on an upwards trend.”

“One driving factor behind house hunters wanting to move sooner rather than later are interest rates. 

“With the Bank of England putting up rates more than once this year, many buyers have established a stronger sense of urgency. Another reason that drives buyer enquiries is that the market is seeing a post-pandemic reshuffle. 

“After many house hunters put their search on hold or changed priorities over the past two years, we have since been registering enquiries from families wanting to finally make their move a reality as well as international students, international buyers and office workers who require a pied-à-terre closer to work again.”

Nick Leeming, chairman of Jackson-Stops, said while parallels between 2022 and the high inflationary environment of 1976 appear to be growing by the day, the market continues to see an inflow of committed buyers and sellers “who have a strong sense of urgency for transactions to complete ahead of further interest rate rises.”

For now, he said, the market remains in agreement that a sudden drop off in house prices and transaction levels is not the current direction of travel, adding: “Jackson-Stops latest branch data reflects this buoyancy, increasing property exchanges in July month-on-month by 40%. 

“We’re continuing to see strong activity particularly at the top end and coastal hotspots such as Suffolk and North Yorkshire. Strong demand, committed cash buyers, and a market that continues to encourage borrowing, will all help to keep this ship on course. Parts of the market that may feel a cool breeze are the homes that have been optimistically priced which may make buyers think twice.

“The maze of red tape which has led to significant completion times will mean that sellers looking for a smoother completion should consider the full picture of a prospective buyer; it may not simply be the highest price that is the most appealing, those able to move quickest could clinch the sale.”