Housing transactions declined by 0.5 per cent between July and August, according to HM Revenue & Customs data.
The number of seasonally adjusted residential transactions was 103,490 in August – down from 104,010 the previous month.
It is the first fall in housing transactions since May, when transactions declined by 2.7 per cent.
On an annual basis, seasonally adjusted transactions were up 6.6 per cent on the same month in 2016 and around the same level as August 2015.
But HMRC cautioned against year-on-year comparisons, pointing out that consumers may have changed their behaviour due to the European Union referendum result in June 2016 and the general election result in June 2017.
The data adds to a picture of a flatlining housing market, with the Royal Institution of Chartered Surveyors (Rics) recently revealing new buyer enquiries remained flat for the ninth straight month in August, while 4 per cent more survey respondents saw a fall in new sales instructions.
Meanwhile, Halifax has reported that house price inflation is partly being sustained by a shortage of available properties.
Jeremy Leaf, north London estate agent and a former Rics residential chairman, said: “Transaction numbers are much more relevant than whether property prices are moving up and down, which of course reflects scarcity.
"If the numbers aren’t there in terms of transactions it is not good for the economy and certainly not good for the housing market.
“These figures aren’t surprising when you consider they reflect the period over the summer when the market was relatively quiet and also the figures from last year when the market was in the doldrums.
“London is the engine driving the national economy and principal source of taxation revenue so the government won’t want to see a substantial reduction in activity over the medium to longer term.”
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “UK lending figures remain strong in the face of global uncertainty, but as these figures show the current maxim for many homeowners is ‘improve not move’.
“With affordability restrictions from lenders and large stamp duty bills on many homes, homeowners are deciding to extend their properties to cater for their growing families, rather than starting their property search from scratch.
“Last-time buyers also continue to face difficulties downsizing with a lack of suitable properties to move into, and ultimately this is creating choke points in the housing market that make it harder for first-time buyers to take their first step, second steppers to move up the ladder.
“The government is taking steps to address the housing crisis, but there is more that can be done.
"House building remains a priority – even more homes are needed if we are to tackle the housing crisis, but the government should also look at other barriers like stamp duty, which are only serving to deter buyers from moving home and freeing up existing housing stock.”
simon.allin@ft.com
