Home completions fell 13% in the second quarter of the year compared to the first three months, disrupted by rising interest rates says Landmark Information Group.
The data firm says that while new housing supply grew in the period, with listings 12% higher in June than the 2019 benchmark during the pandemic, transactions are failing to progress to the sold subject to contract stage, with this level 23% lower than in June 2019.
It adds that completions were 39% lower than the second quarter of 2019.
The figures come as Housing and levelling up secretary Michael Gove today unveiled plans to convert “shops, takeaways and betting shops” in a bid to fulfil the government’s manifesto commitment to build one million homes over the course of this Parliament.
The data also follows inflation falling to a 16-month low of 7.9% in the year to June last week, according to the Office for National Statistics, from 8.7% in the year to May.
Financial markets are betting that this ease in the rise of the cost of living will reduce pressure on the Bank of England to aggressively lift the base rate, currently at 5%.
The base rate has risen 13 times in a row since December 2021.
Investors forecast a peak base rate of 5.75%, compared to predictions earlier in the week of the rate hitting 6.5% next March.
However, mortgage rates remain more than three times higher than their sub-2% levels two years ago.
The average two-year fixed residential mortgage rate rose by a single basis point to 6.81% today, compared to Friday.
While the five-year fixed residential mortgage rate is unchanged at 6.32%.
Mortgage valuation volumes were 35% lower in the second quarter of the year, compared to the same period in 2019, “emphasising the challenges faced by prospective buyers”, says Landmark.
Landmark chief executive Simon Brown adds: “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 the second quarter of this year.
“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.
“Activity will only flow through the pipeline once the market finds 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.”
