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UK house sales fall in slowing market

Updated: Jul 19, 2022

Britain's property market boom is showing signs of cooling as house sales fell slightly in June, with experts warning mortgage prices could surge and deter first-time buyers amid rising inflation.

Figures from HM Revenue and Customs (HMRC) show there were 106,780 transactions last month, down 3.9% from May.

The seasonally adjusted sales last month were 12.1% lower than April 2021 when the stamp duty holiday was still in full swing.

However, despite the drop in sales, transactions were ahead of pre-COVID levels in 2018 and 2019, suggesting the market remains supercharged despite inflationary pressures.

The property market having enjoyed strong growth over the last few years — thanks in part to the stamp duty holiday — older homeowners do have wealth tied up in their property that they can fall back on.

A separate analysis suggests asking prices for UK properties rose to a new record for a fourth-straight month, though there are signs the market is starting to ease

Rightmove said the price sellers are seeking when putting homes on the market rose 2.1% in May to a record high of £367,501. This marks a £55,551 jump since the housing market was halted at the start of the pandemic, almost 10 times the £6,218 increase in the two years before.

The fourth successive interest rate rise by the Bank of England to rein in inflation has been costly for mortgage owners, who are now paying more than tenants.

In June, average monthly mortgage payments of £901 overtook the cost of rent, which stood at £887, according to Rightmove.

The mortgage market has also become increasingly challenging for buyers. We’ve seen Interest rates add over £1,000 to mortgages annually, and they are set to rise further to 2% by the end of the year.

This could put homeowners under a tremendous burden if they have stretched themselves on short-term deals.

The good news is that long term deals are very competitive at the moment. There is just 0.34% interest separating a 2-year fix from a 10-year fix. With interest rate hikes likely, buyers might want to think in the long term when selecting their mortgage deals.

So do get in touch!

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