There was a return to pre-pandemic property market conditions in the third quarter of the year, with early signs of turbulence in Q4 – following cross-market reactions to September’s fiscal event, Landmark Information Group’s latest market data shows.

The Property Trends report, which analyses residential property data for the year up until Q3 2022 across the entirety of the transaction chain in England and Wales, reveals steady levels of activity and a continued return to pre-pandemic market conditions – that started to become apparent in Q2 – with listings above 2019 benchmark levels for two consecutive months (August and September) for the first time in a year.

However, this trend does not seem to be filtering through to completions, which according to the latest market data, are down 12% in Q3 2022, compared to 2019.

The report highlights that the market is not yet seeing signs of the impending fall in demand that has been suggested will follow the current economic uncertainty, with demand still stable at the end the quarter. Supply and demand also became more closely matched across the third quarter of the year, with supply up 5% on September 2019 levels at the end of the quarter.

But early Q4 data suggests conveyancing and lending processes will come under pressure in the next quarter, in the face of current concerns over mortgage availability and affordability.

The newly released report also shows potential signs of the cost-of-living crisis starting to impact consumer confidence, with Q3 SSTC down 2% on last quarter.

Simon Brown, CEO, Landmark Information Group, said: “Whilst Q3 property market conditions show continued return to pre-pandemic levels, they are likely only the ‘calm before the storm’ – with the tail end of the quarter showing signs of headwinds yet to hit.

“The fragmented property transactions pipeline will continue to come under pressure, faced with continued interest rate movement, lending pressures, and an expected drop in demand in early Q4.

“Despite this, the positive increase in supply levels during Q3 could signal a potential reversal of the restricted supply we have seen during the past year. But only Q4 data will be able to tell the full story, as current instability is likely to derail this trend.”

Key findings from the report:

Cross Market Activity Summary

• Listings held at above 2019 levels (used as benchmark year) in August and September, shooting up in the last month. It is the first time listing levels have held above 2019 levels for consecutive months in the last 12 months.
• Searches remain consistent in Q3, in line with SSTC levels during the quarter.
• SSTC numbers are continuing to lag behind 2019 levels, potentially as the cost-of-living crisis begins to affect consumer confidence.

Market Supply

• Supply returned to normal market levels in Q3, with this trend holding for the last two months of the quarter for the first time in the last 12 months.
• After listings rallied in the second month of last quarter, this two month hold points to a potential reversal of the restricted supply we have seen during the past year.

Demand

• SSTC numbers continue to lag behind 2019 levels.
• However we are yet to see in the data the significant drop in demand that has been suggested will follow current market uncertainty.
• Q4 will be key to establishing whether the market will remain at normal levels into 2023 – but is subject to emerging pressures facing the market.

Property Search Trends

• July saw the lowest search and SSTC volumes of all year (vs. 2019), likely due to the start of a summer vacation period lull – the first major vacation since lockdown as well as the fact there were very high volumes seen in the same month in 2019.
• August levels came close to 2019, with September search volumes seeing considerable daily variability.