While transaction levels have reduced over the last year, it’s the non-residential market that has better weathered the storm caused by higher borrowing costs and economic uncertainty.

This is according to the latest research by property development appraisal software, APRAO, which shows non-residential transaction levels down by just 5% year on year versus a 18% drop across the resi sector.

APRAO analysed the latest Gov data on quarterly property market transactions, looking at the split between the resi and non-resi sectors and how both have performed in what has been a challenging year for the UK market.

The analysis shows that during the first quarter of 2024 some 255,570 transactions took place across the market as a whole, a quarterly drop of 13.1% and 7.4% fewer compared to Q1 last year.

In fact, it was the lowest quarterly total seen of any quarter since Q1 2022 following the first of 14 consecutive interest rate hikes in December 2021.

In terms of market split, residential transactions continue to account for the lion’s share of market activity, with 88.8% of transactions in Q1 of 2024 coming via the resi sector. However, the 11.2% of market activity that did come via the non-resi sector was the highest proportion seen since the start of 2022.

When analysing transaction trends within each market segment, the research by APRAO also shows that the decline in market activity seen during the first quarter of this year has been far less pronounced within the non-residential sector.

Across the UK, residential transaction numbers fell by 17.8% in Q1 2024 versus Q1 2023. However, the decline seen across the non-resi sector sits at just 5%.

Residential sales were down by 18% or more across England (-18.7%) and Wales (-18%) during Q1 of this year, whilst across the non-residential sector they fell by just 4.7% and 3.7% respectively.

Just Scotland has seen a similar level of decline across both sectors, with residential transactions in Q1 down 9.5% year on year, while non-resi sales fell by 8.5% during the same period.

APRAO chief executive Daniel Norman commented: “Since interest rates started to climb in December 2021, we saw fourteen consecutive hikes which cultivated a great deal of market uncertainty, not to mention the ever growing obstacle presented by increasing mortgage rates.

“This has presented a challenge for homebuyers and property investors alike and while we’ve now seen a freeze on rates, both resi and non-resi transactions hit a two year low during the first quarter of 2024.”