Search Acumen comments on HMRC’s latest property transaction data for May

Andrew Lloyd , Managing Director at Search Acumen, says:

“The latest decline indicates that falling market confidence is now translating into weaker deal flow. This is a negative signal for the economy, particularly as seasonal transaction levels at this time of year are typically more resilient. New political uncertainty tied to a new Prime Minister is also likely to weigh on near-term performance.

“Transaction volumes are below 100,000, showing that underlying market pressures are becoming more evident. We know transactions are taking longer to complete, so official figures often reflect conditions that have already changed, and this is a market deeply impacted by fast-changing economic sentiment. Affordability constraints, cost-of-living pressures, and higher mortgage rates are limiting growth. Forward indicators point to further deterioration, with Zoopla today reporting a 15% drop in buyer demand and a 7% fall in sales agreed year-on-year, alongside separate figures released today from the Bank of England, noting a 14.9% drop in net mortgage approvals. London has been hardest hit, highlighting a structural shift away from the house price inflation cycles the market has long relied upon.

“In commercial property, transaction activity is often one of the earliest indicators of market confidence levels. Current data suggests the market is finely balanced: growth remains limited, but a steady cohort of investors continues to deploy capital and commit to long-term positions despite geopolitical uncertainty and ongoing questions around asset pricing. Sentiment is watchful but stable, with no significant volatility in either direction.

“Moving forward, however, there are several key hurdles the sector needs to navigate, not least of which is the appointment of a new Prime Minister. Questions around retrofit targets, grid capacity, business rates, and potentially damaging fiscal policy from a new Chancellor could all easily hit the brakes on growth if mishandled. As a result, investors are likely to become more selective, focusing on sectors with resilient income profiles, such as prime offices and data infrastructure.

“The next question will be whether buyers accept that certainty isn’t forthcoming and move ahead anyway, and, if so, what the future Autumn Budget will look like for a government determined to shake up property taxes and leave its mark. Growth will come from unlocking transactions and development, which have historically responded more effectively to fiscal incentives rather than to restrictive policy measures.”