The seasonally adjusted figure showed this was the first monthly decline since May, according to data from HMRC.
The latest transaction data indicated there were 121,640 completions in the residential market over the month, a 24.1 per cent rise on last year where activity was high due to confidence resulting from the General Election results.
HMRC acknowledged that the annual increase was likely caused by the stamp duty holiday as well as continued pent-up demand.
The non-seasonally adjusted number of transactions totalled 98,830 in January, the highest for the month since 2007 when transactions reached 114,880.
Meanwhile, both seasonal and non-seasonal figures showed transactions were at their highest point in a decade.
Slower but stable first quarter
Jonathan Hopper, CEO of Garrington Property Finders, said: “Not even a nationwide lockdown could cramp the property market’s style in January.
“Covid restrictions meant viewings slowed to a trickle, but behind closed doors, property transactions continued to go through at a prodigious rate – up nearly a quarter on last January.”
Hopper added: “Pushing against that is the large number of transactions still in the pipeline, in which buyers are racing to complete in the final weeks before stamp duty rates rise at the end of March.
“The February and March data will likely see a sprint finish of transactions, so the true test of the market’s momentum will start in April.”
Mike Scott, chief analyst at estate agency Yopa, said the firm expected the number of purchases to remain “very high” until March before dropping off and returning to normal.
“The year as a whole is likely to see a higher number of purchases than in recent years, perhaps as high as 1.3m.
“After a brief slowdown in the second quarter after the stamp duty holiday ends, we anticipate a very active housing market in the second half of this year,” he added.