The number of property deals being recorded continued to fall in October, with non-seasonally adjusted residential transaction figures reaching 90,920, down 17% year-on-year and a fall of 2% from the prior month.

The data, provided by HM Revenue & Customs (HMRC), shows that seasonally adjusted residential transactions hit 82,910, a fall of 21% compared to last year and 3% down on September numbers.

There were around 10,280 non-residential transactions, up 5% on October 2022.

Nicky Stevenson, MD at Fine & Country, said: “Affordability challenges are holding back property transactions, which saw a small month-on-month fall, but the housing market remains in a stable position on the whole.

“Buyers remain cautious about overpaying on their next home, but sellers are much more open to negotiation than they were this time last year, which is helping to get deals over the line.

“Interest rates seemingly reaching a peak is encouraging more people to begin or resume their house search, which should provide a solid foundation for the market in the months to come.

“Good quality homes in sought-after locations continue to attract strong interest, but sellers still need to price sensibly in order to grab attention.”

Tom Bill, head of UK residential research at Knight Frank, commented: “The housing market slowdown of 2023 has been the story of a steep drop in sales volumes rather than prices but a recovery appears to be underway.”

Bill highlights that transactions are time-lagged and still down by 15-20% but there is a growing sense that the worst of the economic news is behind us.

He continued: “Inflation has fallen below 5%, speculation is turning to when the first rate cut will come and downwards pressure on mortgage rates will be helped by competition among lenders in a low-volume market. There was no autumn bounce this year but there are indications that next spring will see a seasonal increase in activity. If we are not at the bottom of the market, we are close.”

Nick Leeming, Chairman of Jackson-Stops, commented: “The market is embracing greater realism on pricing, reflecting a market that is more balanced with buyers now in the strongest negotiating position in five years.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said that transactions were a “better test of housing market strength” as opposed to pricing.

Frances McDonald, director of research at Savills, believes there is plenty of room for optimism despite the latest downturn.

She added: “Completed transactions in October remained relatively muted as high mortgage costs during the summer months led to lower activity levels.

“But recent lead indicators suggest that activity is beginning to pick up. Mortgage approvals increased by 8.5% month on month in October and November net agreed sales recovered to within 5% of their pre-pandemic average, according to TwentyCi data.

“Despite lower levels of transactions this year, activity has remained more positive than anticipated in the wake of the mini budget, as cash buyers take a larger share of the market. Savills is forecasting that transactions will total 1,010,000 in 2023, but cash will remain king, making up 43% of the market.

“Numbers are likely to recover to 1,040,000 in 2024 once mortgage rates come down more significantly and they’ll reach 1,160,000 by 2026.”