UK residential transactions have increased by 6% in June 2023 compared to May, HM Revenue and Customs (HMRC) has stated in its monthly property transactions data.

The data found that in the provisional seasonally adjusted estimate, there were 94,690 residential transactions in the UK in June, 15% lower than 12 months earlier.

The provisional seasonally adjusted estimate for UK non-residential transactions also increased 5% month-on-month, just a 4% decrease compared to June 2022.

The results, which are based on records from HMRC, Revenue Scotland and the Welsh Tax Authority, show a change in the downward trend in residential and non-residential
property transactions in recent months.

Residential property refers to buildings used or suitable for use as a dwelling, or in the process of being constructed for use as a dwelling. It also includes the gardens and grounds of dwellings.

Mortgage expert at Quilter, Karen Noye, said: "Despite the turbulence of recent times, the UK residential property market has shown remarkable resilience. The latest data on a seasonally adjusted basis show transactions were down by 15% compared to June 2022 but positively were 6% higher than May.

"This decline in transactions aligns with the growing squeeze on affordability, which is now having tangible effects on the property market. Recent indicators show that house prices were stagnant or dropped.

"Whilst it's true that June's transactions have seen a month-on-month increase, this is arguably more reflective of the high number of working days in June relative to May, and possibly an uptick in underlying activity. However, with increasing mortgage rates, the prospect of further interest rate hikes, and a growing squeeze on affordability, the outlook for the housing market remains uncertain.

"The sharp spike in mortgage rates seen in recent weeks is yet to be fully reflected in the housing market data. All this could further exacerbate affordability issues. Current homeowners may struggle to meet their growing mortgage payments, and potential first-time buyers might be deterred by high monthly repayments stifling transaction numbers."

Hargreaves Lansdown head of personal finance, Sarah Coles, added: “This is an interval, not the end of the show. Property sales may have picked up slightly in June, but we can expect the decline to kick off again in a couple of months. Higher transactions in June came courtesy of slightly more working days and the easing of mortgage rates back when these sales were agreed. We may well see more sales again in July, but after that, today’s higher mortgage rates are likely to hit hard. We can’t applaud the end of the sales slump, because the second act is about to start.

“Sales were up 6% between May and June. However, it’s worth bearing in mind this was from a very low base, and when you compare it to a year earlier, they were actually down 15%. Aside from the early pandemic, it’s the slowest June in a decade, so this is a small bump in an overall decline.

“Given that it takes around three months from agreeing a sale to completing, these figures reflect buyer sentiment in March. Back then, mortgage rates had eased off significantly from the mini-budget spike, and according to Moneyfacts, the average 2-year fix was around 5.3% and the average 5-year fix around 5%. Rates continued to fall slowly through April – so July’s figures may look reasonably healthy too. However, in the months since, they’ve risen gradually and then rapidly, pushing 2-year fixed rates above 6.8% and 5-year rates over 6.3%. This has taken a massive toll on demand, which Zoopla figures show has fallen a fifth in the past two months. It means that when we get sales figures for the Autumn, we can expect some significant drops.”

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