Jonathan Samuels, CEO of Octane Capital, believes that the latest property transaction data underlines the growing strength of the residential market compared to commercial property, as the firm’s latest analysis shows that residential transactions have continued to climb this year while commercial activity is once again on the decline.
The latest research from the specialist lender shows that while non-residential property transaction volumes are down by 5.5 percent across the UK so far in 2025, the number of residential transactions has increased by 6.1 percent over the same period.
Octane Capital analysed the latest figures on property transactions across the UK market, looking at the average monthly level of activity across both sectors and how this compares to 2024.
The research shows that non-residential transactions are averaging 9,910 per month in 2025, down from 10,488 per month in 2024, a drop of 5.5 percent, signalling a renewed slowdown across the commercial investment market. In contrast, residential transactions are averaging 97,458 per month this year, up from 91,868 in 2024, an increase of 6.1 percent, highlighting the continued resilience of the housing market.
While total commercial transactions rose by 5 percent 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 percent increase in average monthly transactions, followed by Wales at 5.6 percent.
According to Octane Capital, the disparity between the two markets is being driven by higher borrowing costs and changing investment appetite. The commercial sector has been hit harder by rising finance costs, stricter credit conditions, and weaker occupier demand, while the residential market has benefited from greater buyer confidence, improved mortgage affordability, and sustained underlying demand for housing.
Jonathan Samuels, CEO of Octane Capital, commented:
“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.
However, the residential market is not without its own set of challenges. 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 and, as a result of these complexities, Octane Capital is observing consistent and robust demand for specialized financing solutions such as residential bridging and development finance.
The ability to access flexible and timely funding remains crucial for those seeking to navigate the evolving landscape and take advantage of the opportunities available in the residential market.”
