The latest data from HMRC shows that there were 82,000 residential property transactions completed in January on a seasonally adjusted basis, which was the lowest level for the month since 2013.

The 11-year fall was despite a monthly rise from the 80,500 property transactions completed in December, which was also the first month-on-month increase since August 2023.

On a non-seasonally adjusted basis, residential transactions fell by a fifth month-on-month to 68,090. HMRC said this was typical for January as transactions tended to fall by between 20-30% compared to December.

Compared to last year, the non-seasonally adjusted residential transactions were lower than the 75,690 completed in January 2023.

Industry reactions:

Iain McKenzie, CEO of The Guild of Property Professionals, commented: “January saw a 12% drop in property transactions year-on-year, underscoring the fragile state of buyer confidence following a tumultuous 2023 in the market.

“There are signs that the economy is finally stabilising, with the Bank of England’s base rate holding at 5.25% since September and inflation predicted to fall. But buyers with stretched budgets may need a few more positive signs from the economy until they feel ready to commit.

“However, there’s optimism on the horizon. Despite the year-on-year decline, transactions increased by 2% compared to the previous month, indicating a steady rebound from December’s seasonal slowdown.

“This upward trend is expected to continue in 2024, especially as lenders align mortgage rates with the more stable base rate. This will be particularly promising for first-time buyers, many of whom postponed their plans due to affordability challenges last year.

“As more individuals take their initial steps onto the property ladder, we anticipate a boost in transactions later this year.”

Nick Leeming, chairman of Jackson-Stops, said: “The figures show transactions continued to fall in January on an annual basis, with a slow start not wholly unexpected for the time of year. Anecdotally, across the Jackson-Stops national network in January we saw an uptick across the board for appraisals, viewings and instructions, suggesting that the tide may soon be turning, and consumer confidence is firmly on the up. But today’s figures do demonstrate just how low transaction volumes have become under the Current Chancellor, Jeremy Hunt. Muted transaction volumes in recent times have left many anticipating change may be afoot in the lead up to the Spring Budget on March 6.

“Rumours are already circulating of new mortgage schemes, potential tax cuts, and other ways of stimulating the economy and inspiring consumer confidence. Homeownership, and the journey to it, continues to be one of the most divisive issues as the UK defines itself as Generation Buy and Generation Rent. In recent days the possibility of 99% mortgages for first-time buyers, downsizing incentives and promises to ‘turbocharge’ housebuilding have become more prominent, though everything is still to play for until the Chancellor approaches the lectern on Wednesday. Expected to be the final Budget before a General Election, it’s more important than ever that the Chancellor wins the hearts, minds, and votes of buyers and sellers to avoid what many expect to be a Labour landslide.

“Regardless of what the chancellor does or doesn’t announce, policy changes will not have an overnight impact. It’s important that the Government continues to do what it can to create a more balanced housing environment that aligns buyer demand to seller supply, but as these figures show, the lack of new homes entering the market has created a sense of stale mate for transactional mobility. However, we must not forget there are brighter days ahead. February is looking promising, reflected in our huge jump in Jackson-Stops viewing figures and seller supply for the mid-market, likely to see more sale conversions from interested buyers into completions.”

Lucian Cook, head of residential research at Savills, commented: “The pick up in mortgage approvals reflects more stability in the mortgage markets in the early part of the year, and an easing in the cost of fixed rate mortgages, which has increased the range of buyers active in the market.

“A 7% increase in seasonally-adjusted mortgage approvals brings them back to 84% of a normal pre-pandemic market, as the average mortgage rate on new lending fell to 5.19% in January, down from 5.34% in November.

“Completed housing transactions, which remained subdued, continue to lag on more up to date activity indicators.

“Real time data from TwentyCI indicates that there was an improvement in underlying housing market conditions in February, with activity levels 10% above the pre-pandemic average, even accounting for slightly higher than normal fall thorough rates.

“The biggest uptick in activity has been in the £300,000 to £500,000 price band, where activity levels in the month were 30% higher than the same time last year.

“But despite increased activity, the market remains price sensitive. The same data indicates that there has been a 52% increase on the number of properties experiencing a change in asking price (compared to the 2017-2019 norm).”

Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, commented: “On the ground, the ales market is picking up momentum after a quieter 2023. A surge of committed buyers and a strong pipeline of serious applicants bodes well for sellers.

“With a historical pattern of market slowdown during an election year, the current landscape presents an ideal moment for vendors to capitalise on heightened demand, potentially resulting in faster sales and more favourable prices. Notably, we’ve seen an uptick in applicants with sizeable budgets seeking to upsize to their forever homes, as well as first-time buyers and second steppers wanting flats with outside space.

“Overall market strength and stability is being underscored by better mortgage rates and persistent supply/demand imbalances, which is particularly evident across London.”

Maria Harris, chair of the Open Property Data Association, commented: “Residential transactions have fallen yet again, although this is not surprising for January or in the current economic environment. However, the positive news around inflation and unemployment point to a stronger housing market and there are already signs of recovery. Housing transaction volumes rely heavily on consumer confidence and our notoriously slow and clunky home buying and selling process doesn’t drive a positive consumer experience. Making transactions easier and more transparent for buyers, sellers, and the industry has never been more important but this needs accurate and trustable data. Currently, less than one per cent of property data is openly available in a digital format. Converting all property data sources and documents to a digital format and making it shareable through open data standards is essential to achieve the digital transformation we all need.”