Despite the residential property market showing signs of improvement, ongoing economic uncertainty remains with the Autumn Budget looming.
Data from Octane Capital reveals the resilience of the residential sector compared to weakening demand in the commercial property market.
Research shows that while non-residential property transaction volumes are down 5.5% across the UK so far in 2025, residential transactions have risen by 6.1% over the same period.
Residential property market has shown a more resilient performance
According to the data, non-residential transactions are averaging 9,910 per month in 2025, down from 10,488 per month in 2024.
In contrast, residential transactions are averaging 97,458 per month this year, up from 91,868 in 2024, an increase of 6.1%.
While total commercial transactions rose by 5% in 2024 before slipping back this year, residential activity has not only recovered from the lows of 2023 but is now trending higher than at any point since 2022.
England has seen the strongest uplift in residential activity, with a 7% increase in average monthly transactions, followed by Wales at 5.6%.
Jonathan Samuels, CEO of Octane Capital, says the commercial property market continues to be hit by rising finance costs.
He said: “The commercial property market continues to face significant headwinds, with higher operational costs, subdued occupier demand across various sectors, and more stringent lending conditions collectively restricting investment activity. These pressures are contributing to a projected weakening of commercial transaction volumes throughout 2025.
“In stark contrast, the residential property market has shown a more resilient performance this year, with transaction levels trending upwards. This positive shift is largely attributable to an improvement in buyer sentiment, which has been buoyed by a general downward trend in mortgage rates. The greater affordability and increased confidence have spurred activity, suggesting a divergence in the fortunes of the commercial and residential real estate sectors.”
Growing uncertainty over the Autumn Budget
Mr Samuels adds the residential market is not without its own set of challenges, particularly with the Autumn Budget in the next few weeks.
He said: “While buyer sentiment has improved, ongoing economic uncertainties, stubborn levels of inflation and the potential for future interest rate adjustments mean that it is not an entirely smooth ascent.
“In addition, growing uncertainty over the upcoming Autumn Budget is also playing its part.”