House sale completions fell 5.7 per cent last month compared to a year earlier as potential buyers were put off by stamp duty and higher prices in urban areas, new figures show.
Residential sales also declined three per cent between May and June to 96,370, according to HM Revenue and Customs data.
It follows the Office for National Statistics’ house price index which last week revealed that house price growth in May slowed to its lowest annual rate in almost five years.
In decline: House sale completions fell 5.7% last month from a year earlier as potential buyers are put off by stamp duty and higher prices in urban areas, according to HMRC figures
On average, however, UK prices have climbed three per cent in the year to May, despite dropping 3.5 per cent in April and to the lowest annual growth rate in six years, said the ONS.
Kevin Roberts, director, Legal & General Mortgage Club, said: ‘Overall housing transaction figures are stagnant.
‘Barriers to moving, such as stamp duty and the high price of property in our urban areas, means that for many the maxim remains “improve, not move”, as they seek to renovate or develop their homes, rather than move up the housing ladder.
‘The biggest factor is housing supply.
‘The nation simply hasn’t built enough new homes over the last decade to keep up with demand.’
Jeremy Leaf, north London estate agent and a former RICS residential chairman said the transaction numbers were a better indicator of market strength than house prices, reflecting the economic and political uncertainty.
‘We certainly would have expected higher figures bearing in mind the spring buying season is generally the best for the property market.
‘However, we are not really surprised when, on the ground, we are seeing fewer buyers nervously trying to negotiate best possible terms and transaction times lengthening as a result.
‘We don’t expect to see any great change but have noticed more listings and viewings in the past month or so, which hopefully will be reflected in slightly higher transaction numbers later in the year.’
Down valuation: This week experts warned that an increase in lenders placing down valuations on properties could signal a growing anxiety over the health of the housing market
Mike Scott, chief property analyst at Yopa, the low fixed-fee estate agent, said that with the seasonally adjusted total standing at 586,530 completed house sales, 4.5 per cent down on the 614,240 in the first half of 2017, it seems likely the annual figure will fall short of 1.2million house sales.
‘The slowdown seems to be driven by both lower supply and lower demand, and so it is unlikely to have much effect on house prices, which will continue to increase as long as we keep the current situation of low unemployment, low interest rates and good availability of mortgages,’ he said.
Brian Murphy, head of lending for the Mortgage Advice Bureau said: ‘Overall transaction numbers are only slightly down on the first half of this year against the same period in 2017 – a drop of 4.5 per cent – although a simple explanation for the decrease could be that there remains a lack of properties available to purchase which clearly will impact the number of homes sold.
‘Therefore, in many respects, one might suggest that the market is so far performing within expectations for this year, and as such the current status quo of low interest rates, low unemployment and good mortgage availability remains.’
Alex Depledge, chief executive and co-founder of Resi.co.uk, added: ‘After a slight uptick in transactions in May, a decrease in June will be disappointing for those looking to sell their home.
‘Issues still remain as second time buyers are being hit by high stamp duty costs and are struggling to afford to move, halting growth within the market.’
This week experts warned that an increase in lenders placing down valuations on properties could signal a growing anxiety over the health of the housing market.
Leading mortgage brokers told the BBC’s Victoria Derbyshire programme there has been a significant rise in the number of homes being valued by banks and building societies at less than what buyers have agreed to pay.
In the past two years, the number of sales resulting in a ‘down valuation’ has increased from one in 20 to one in five – the highest level since the 2008 financial crash.