"It’s positive to see that property transactions in August have increased, especially when the summer is traditionally a slower time for the market."
Residential property sales increased by 11% between July and August, the latest HMRC figures show.
The non-seasonally adjusted transaction figures show an 11% rise, "as is typically the case in August", HMRC says.
Seasonally adjusted residential transactions have also continued to rise in August, making it the third consecutive month to show an increase in transactions, which are up 1% relative to July. This follows a month-on-month increase of 6% and 0.3% in June and July respectively.
However, both seasonally and non-seasonally adjusted transactions remain 16% lower than in August 2022.
Tony Hall, head of business development at Saffron for Intermediaries, commented: “It’s positive to see that property transactions in August have increased, especially when the summer is traditionally a slower time for the market. When combined with the fact that the Bank of England base rate hasn’t increased further, this may provide a much-needed boost to consumer sentiment.
“Swap rates are far less volatile now than earlier in the year, and many lenders have factored in future base rate rises. As a result, we’ve seen fixed rates being repriced downwards.
“However, we have seen a rise in gazundering – a process where a buyer lowers the offer made on a property just before the exchange of contracts. This is a rising concern in the industry which has resulted in some purchases falling through. This can happen when a buyer finds issues with the property during the surveying process. Reforms to the house buying process in England to introduce a home report, similar to the Scottish system, could be a suitable solution to this problem.”
Anna Clare Harper, CEO of sustainable investment adviser GreenResi, said: "Transactions are a useful indicator of the health of the market, since they illustrate the strength - or weakness - of demand. The 16% annual reduction in transactions is a direct result of increased interest rates, which have stretched housing affordability.
"Many who already own a property are facing double or triple their previous housing costs. Potential buyers reliant on bank finance are no longer willing or able to pay last year’s prices. Nowhere is this more evident than amongst new build homes, where affordability is trumping attractiveness. New-build transactions are now significantly below 2008 levels, to circa 1,000 per month.
"A re-pricing is expected amongst properties that are being sold due to necessity. This is because only cash purchasers are not directly affected by higher interest rates, and these purchasers have strong negotiating power. Investors we work with continue to buy, albeit cautiously, and they are typically purchasing at 10 to 30 per cent below peak 2022 market values.
"The adjustment to pricing in parts of the market is in many ways a natural next chapter following the mini bubble caused by Covid and stamp duty reductions, which created double digit house price growth for much of the last three years."
