The number of property transactions taking place in September was down significantly on last year, the latest figures from HM Revenue & Customs (HMRC) have revealed.

The data showed that on a non-seasonally adjusted basis there were 92,600 residential transactions in September, down 2% from August and 19% from the corresponding period last year.

Meanwhile there were 10,060 non-residential property transactions over the month, which is up 7% from the month earlier but 6% down on an annual basis.

Industry reactions:

Anthony Codling, former City analyst and now chief executive of Twindig, said: “Housing transactions were stable in September, but are 27% lower year to date – it is transaction volumes rather than house prices which have so far felt the chill of the cost of living crisis. Housing transactions have been stable since June this year, suggesting that homebuyer’s glass is neither half full nor half empty, but finely balanced.

“We suspect homebuyers have their eyes firmly fixed on CPI and mortgage rates and with food inflation at its lowest for 15 months, the scene is being set for upward pressure on Bank Rate and mortgage rates to ease. We are not at a turning point yet, but we suspect we are getting closer.”

Nick Leeming, Chairman of Jackson-Stops, commented: “Transactions remain consistent month on month, another indication that the market has shown stability in the face of wider economic challenges.

“However, there has been a gradual increase in the length of time it is taking from offer accepted through to completion. Particularly for longer chains that are reliant on multiple mortgages being approved and accurate valuations, the risk of fall-throughs only rises.

“Buyers and sellers are taking a level headed approach to property sales, with sensible pricing and committed movers clearly underpinning market activity. Cash buyers that remove the risk of down valuations and whose offers are often taken seriously due to the quick move times they allow, are dominating several regional trends. At moments like this, accurate pricing that considers local market conditions, is essential. But certain local market nuances are continuing to emerge; across the Jackson-Stops network, Sherborne, Norwich and Blandford are showing the biggest increases in transaction volumes, with buyers continuing to outnumber sellers month on month.

“The reality is that the market continues to be faced with a backlog of transactions, outstanding from the frenetic activity levels of 2021. While the market was enjoying its extended moment in the sun, the arrival of a more balanced market does mean that only committed buyers are moving ahead with purchases, which should help chains to move forward meaningfully.

“The market will be hoping that the Bank of England maintains the base rate at 5.25%, in light of easing inflationary pressures, in order to help restore buyer and lender confidence ahead of a seasonally quieter period for the market.”

Frances McDonald, director of research at Savills, said: “Despite an improvement in mortgage rates since the summer, transaction levels continue to be subdued as buyers remain cautious, adjusting their budgets to a higher interest rate environment.

“Cash buyers have been taking an increasing share of the market (42% so far this year) and those with existing housing equity or higher levels of wealth have been better able to transact in the current market. September’s muted mortgage approval numbers suggest this trend is likely to continue for at least the remainder 2023.

“This chimes with the latest TwentyCi data, which shows that agreed sales net of fall throughs remain -17% below their 2017-19 average for the month. Ongoing activity continues to be facilitated by a 30% rise in price changes over the same period, and net agreed sales are 28% higher than in October 2022, immediately following the mini-budget

“We expect transaction levels to improve once we see a more significant decline in mortgage rates.”

Iain McKenzie, CEO of The Guild of Property Professionals, said: “After a few months of rising sales, a slight fall in September shows the market is not out of the woods yet.

“Although there are signs that the economy is recovering, the reality for many households is that they are still not able to afford to buy in the current climate. Budgets are squeezed and some may have dipped into their deposit savings to get them through the cost-of-living crisis.

“All eyes will be on the next few months, as they are key indicators for the vitality of the property industry. There is usually a rush to complete purchases at the end of the year, as people look to get settled in before the festivities commence and hunker down for the winter.

“The Autumn Statement could introduce some measures to help Brits get on the property ladder, including an extension of the mortgage guarantee scheme for a further year and potentially another form of help-to-buy scheme.

“The proposed changes to the leasehold system on new builds could also give some assurances to first-time buyers that are looking at buying a property for the long term. While we welcome any new incentives to buy, the proof is in the pudding as to whether or not they will work.”

Nicky Stevenson, MD at Fine & Country, commented: “The property market continues to defy all the doom and gloom in the headlines, with only a minor decrease in transactions in September compared to August.

“It’s not surprising that sales are lower than last year, given that we’re comparing figures with the time just before the impact of the Liz Truss mini-budget.

“First-time buyers are becoming increasingly emboldened at the bottom of the market, and the top is being supported by home-movers with significant equity.

“Seeing interest rates reach a peak seems to be encouraging more people to begin or resume their house search.

“The traditional seasonal spike in demand is helping to support solid levels of activity this autumn.”

Jason Tebb, CEO of OnTheMarket, remarked: “Despite challenging market conditions there hasn’t been a drastic fall-off in transactions, which are regarded as a more useful indicator of the health of the housing market than property prices.

“Numerous interest rate rises have undoubtedly had an impact on activity, fuelling borrower concerns around affordability. If the Bank of England holds base rate for the second consecutive meeting, this will give buyer confidence a much-needed boost, particularly as mortgage rates continue to edge downwards.

“While there are motivated buyers out there, they are extremely price-sensitive so sellers must price accordingly if they wish to transact this side of Christmas.”

Matt Thompson, head of sales at Chestertons, stated: “Following the Bank of England’s September announcement of interest rates remaining at 5.25%, buyers felt more secure to make financial decisions and resume their property search. Understandably, the majority of buyers have been particularly careful about their budget by factoring in any future rate hikes as well as the cost of living.”

Andy Sommerville, director at Search Acumen, added: “It appears to be fright night for estate agents in the UK today, with latest HMRC transaction figures showing limited growth in the residential sector as interest rates continue to spook investors.

“As house prices waver, demand is being curbed by mortgage affordability. Banks are now predicting house prices might continue to fall through to next year before recovering. It’s the same overriding issue that’s subduing the commercial property markets as investors are having to devote more of their time to debt refinancing, while the question in most boardrooms is whether it makes more sense to press go on investment opportunities now or postpone decisions in the hope that rates will fall in short to medium term.

“In more challenging market conditions, investors need any edge they can find to maximise returns. It’s been a breakout year for AI and technologies like this have vast potential to help investors make better decisions, whether that’s about finding a competitive edge in a booming market, or mitigating risk during more challenging times. As investors and property owners look for better information to inform their decisions, data and technology can provide new insights to make sense of uncertain market conditions.”