Connells Survey & Valuation has revealed that the number of valuations conducted in September, for first time buyers as well as for home movers, dropped 13% year-on-year as Britons become more cautious over an impending rise in interest rates and stricter mortgage lending rules.
According to the property group's latest set of data, the total number of valuations conducted in September increased by 42% compared to August, but this was not enough to offset the year-on-year decline.
"Sustainability is the new watchword for the housing market. Higher interest rates are getting closer and caps on mortgage to income ratios officially come into force in October – both closely following MMR which has now become a settled feature of the landscape," said John Bagshaw, Corporate Services Director of Connells Survey & Valuation.
"In particular a base rate rise isn't just a factor for the financial world. In the property market, buyers and sellers are increasingly factoring in slightly higher interest costs and a potential slowdown in house price growth.
"Steadier progress isn't necessarily bad news. Autumn last year was exceptionally good for housing market activity. Now, as the UK searches for a long-lost measure of normality, the housing market is displaying sensible levels of caution – a healthy and often life-preserving characteristic. Stability will be important as activity keeps growing into 2015."
Remortgaging was the strongest performing of all sections of the housing market in September as activity soared 57% from the previous month.
However, it was down 9% on an annual basis.
"Remortgaging levels appear to reflect the wisdom of crowds," said Bagshaw.
""Most people don't follow the detailed workings of monetary policy, and no-one can predict inflation or UK growth in six months' time. And yet, they know which way the wind blows – households are taking advantage of cheaper mortgage rates now, as the perception grows that locking in to that market will not be possible for ever."
First time buyers have seen the second fastest monthly pick-up in activity since August, up 39% on a monthly basis.
"First-time buyers are proving unwavering. Many are now ready and determined to buy their first home after putting off the move for many years due to the financial crisis," Bagshaw added.
" Alongside this sheer number of potential home-owners, lenders are increasingly playing their part – even more willing to back new buyers, partly thanks to Help to Buy.
"The overall result is a consistent buoyancy for first time buyer valuations above more muted activity further up the chain."