Sluggish transaction levels rather than a fall in house prices tell the true story of the 2023 property market, according to Knight Frank, but the agency predicts a rise in activity in the next six months.

HMRC’s latest data shows that the number of UK residential transactions in November 2023 was 87,640 – 22% lower than November 2022 and 2% lower than October 2023.

Following the release of the HMRC figures, Tom Bill, head of UK residential research at Knight Frank, said: “UK housing transactions are a fifth below their five-year average, which has been the real story of this slowdown rather than a fall in prices as buyers adapt to higher rates.

“However, given that inflation has dipped below 4% and mortgage rates are heading in the same direction, we expect sales activity to be stronger over the next six months than the last six.”

He added: “Pre-election giveaways may boost the market further in 2024 although demand tends to soften as political uncertainty rises.”

Either way, according to Bill, there is “growing evidence that the worst of this house price correction is behind us”.

He said: “As inflation falls, downwards pressure on mortgage rates means demand should strengthen and transaction numbers will move closer to their longer-term norms in 2024. 

“A tight jobs market, the availability of longer mortgages, the fact more homes are owned outright than with a mortgage and the absence of forced selling due to tougher mortgage stress-testing rules since the global financial crisis have all helped avoid steeper price declines as interest rates normalise,” he added.