The number of home sales in the UK dropped to an estimated 96,710 in July, according to HM Revenue and Customs (HMRC). This is a 1% decrease from the same month last year and a 2% decline from June. Experts link this slowdown to high borrowing costs and ongoing geopolitical uncertainty from the conflict in the Middle East.
Key Details
Mortgage rates have risen sharply since the start of the year, especially after the US-Israel conflict with Iran escalated. While rates have started to ease since spring, many buyers still face higher costs than earlier in the year. This situation has led to a cautious approach in the housing market. Jason Tebb, president of OnTheMarket, said, "The ongoing uncertainty created by the Middle East conflict and its impact on energy prices and interest rates continues to dampen activity."
Despite the drop in sales, some analysts see signs of resilience. Richard Donnell, executive director at Zoopla, noted that while sales are expected to decline further in the second half of the year due to high mortgage rates, there are signs of renewed buyer interest. He pointed out that searches for homes increased by 7% year-on-year, marking the strongest growth in a year. This suggests a potential rebound in activity as autumn approaches.
Background
Iain McKenzie, chief executive of The Guild of Property Professionals, shared this view. He said, "July’s transaction data underlines just how cautious the housing market has been this summer. However, the underlying picture is more resilient than the headline suggests."
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The decline in house sales could impact the real estate sector and related financial instruments. Higher mortgage rates continue to limit buyer activity. Investors will monitor trends in mortgage pricing and buyer sentiment as the market moves into autumn.
Based on reporting by: independent.co.uk, standard.co.uk