Affordability concerns continue to dampen the transaction pipeline despite strong supply
Despite some signs of recovery at the end of the first quarter of the year, the continued fluctuation in interest rates and subsequent squeeze on mortgage availability and affordability disrupted transactions into the second quarter, according to property and land data firm Landmark Information Group.
Its latest data showed faltering property transactions and completions as affordability concerns remain a crucial factor in influencing market trajectory.
While supply continued to grow, with listings 12% higher in June 2023 than the pre-pandemic 2019 benchmark, transactions are often failing to progress to the Sold Subject to Contract (SSTC) phase, with the SSTC level 23% lower than in June 2019.
According to Landmark, this low level of SSTC volumes and affordability can be seen further down the transaction pipeline, with completions at their lowest level all year, as consumers struggled to progress planned home-moves amid continued cost-of-living pressures.
The property data provider’s newly published Q2 2023 Residential Property Trends report also revealed that completions dropped by 13% in the second quarter compared with the first three months, and were 39% lower than Q2 2019 on average.
Mortgage valuation volumes were also 35% lower in Q2 2023 compared to the same period in 2019, emphasising the challenges faced by prospective buyers.
“Despite the promising signs of market stabilisation we were seeing at the end of the first quarter, our data clearly shows how the broader economic instability was impacting the transaction pipeline into Q2 of this year,” commented Simon Brown (pictured), chief executive at Landmark Information Group.
“Progressed demand has remained weak, likely due to ongoing high interest rates and subsequent restricted mortgage availability and affordability – and this has had an inevitable knock-on effect across the rest of the transaction milestones.”
Brown pointed out that activity would only flow through the pipeline once the market found a balance between interest rates, inflation, and the cost of housing.
“When that time comes, speeding up property transactions will be essential to a swift and sustained recovery,” he added.
Landmark’s Residential Property Trends offers a comprehensive analysis of property data, encompassing the entire residential property transaction chain with an extensive cross-market examination of the property sector in England and Wales.
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