UK property transactions rise in May despite signs of housing market cooling

UK property transactions increased by 1.6% last month, despite signs that the housing market is cooling, new data has shown.

According to HM Revenue & Customs (HMRC), on a seasonally adjusted basis there were 109,210 transactions in total in May, 5.1% lower than the previous year, and 1.3% higher than April 2022.

Residential property transactions totalled 100,870 during the period, 2% lower year-on year but 1.6% higher than the month before.

However, this was still the third busiest May for a decade.

HMRC described the figures as “[stable] but somewhat elevated compared to before the coronavirus pandemic”. Transactions are also 11% above their long-run average of 98,048.

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"There are still signs of strong activity in the market even though some of the heat has come out of it, and mortgage brokers remain exceptionally busy,” Mark Harris, chief executive of mortgage broker SPF Private Clients, said.

"Yet another in a string of rate rises from the Bank of England (BoE) is certainly focusing the minds of borrowers, keen to secure a fixed rate mortgage before pricing edges higher.”

Meanwhile, Anna Clare Harper, director of real estate technology platform IMMO, said: "Last year’s temporary stamp duty reduction encouraged homeowners to upgrade and aspiring homeowners to get on the housing ladder. This boosted transactions substantially.

“In fact, the monetary value of average house-price growth far outweighed the monetary value of that reduction in tax, but this was not a barrier due to widely available, cheap mortgage finance, which funds property acquisitions but not transaction taxes. With stamp duty back, the desire to transact is reduced.”

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September 2021 was the final month buyers could benefit from the government’s stamp duty holiday, a tax break designed to prop up the housing market, and help consumers as the economy contracted during the COVID-19 lockdowns.

The holiday was extended from 31 March last year to the end of June and once more, tapering from June to the end of September, as people rushed to market.

Housebuyers could have cashed in on savings of up to £15,000 if they bought at the right time.

The break caused a frenzy in the market, with many using it as an excuse to make long-awaited moves or buy for the first time. However, some said that with climbing house prices over the past year the discount was quickly priced in and that it "distorted" the market.

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, said: “There’s still plenty of life left in the property market, but it’s nowhere near as lively as it was at the peak, and it’s not going to perk up much from here.

"This is a world away from the peaks we saw in June last year, when roughly twice as many homes were sold. Over time, we can gradually expect sales to fall back, because we’re increasingly seeing buyers think twice about getting into the market, and last week’s rate rise isn’t going to help."

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