Across the month, the provisional non-seasonally adjusted estimate of residential transactions came to 85,520. This is down by 12.6 per cent on January last year, and 22.2 per cent lower than in December 2021.
However, HMRC noted that this was more in line with transaction levels typically seen at this time of year before the pandemic, such as January 2020 when there were 83,840 transactions completed.
Despite this, residential transactions for the financial year to date remain strikingly higher than at any point over the last decade. The HMRC data found that so far there have been 1.167 million residential deals in the year so far, which is more than 100,000 more than any year in the last decade.
By contrast, non-residential transactions were up significantly year-on-year. HMRC estimated that in January there were 9,070 non-residential deals, an increase of 21.6 per cent on January 2021, albeit 18.1 per cent lower than in December.
Some market stabilisation
Mike Scott, chief analyst at estate agency Yopa, noted that the level of residential sales was still the second highest for any January dating back to 2007, and suggested that the rest of the year would follow a similar pattern where sales are down from last year’s “over-heated market” but still positive by pre-pandemic standards.
He added: “We do not expect any price falls in the second half of the year, but the market may slow down and stabilise as rising interest rates and high inflation reduce demand and bring it more into line with the number of homes that are available to buy.”
Limited activity pushing up prices
Jeremy Leaf, an estate agent and former residential chairman of the Royal Institution of Chartered Surveyors, said the figures echoed what was being seen in his own offices, where the lack of stock is constraining activity while pushing up prices.
He continued: “The good news is that listings are on the up, prompted by the increase in energy prices and interest rates. This should help to better balance supply and demand, as well as keep prices in check.”
Slow and steady increase to mortgage costs
Mark Harris, chief executive of SPF Private Clients, said there had been a “noticeable dip” in activity, but said brokers remained keen to take advantage of cheap mortgage rates, with inflation pointing towards further base rate rises.
“Even if the Bank of England raises the base rate again at its next meeting, it looks as though we will remain in an ultra-low interest cycle for the foreseeable future and any increase in mortgage costs will be slow and steady,” he concluded.
This was echoed by Andrew Montlake, managing director of Coreco, who noted that the market had been “on steroids” after the stamp duty holiday.
He continued: “There are many red flags ahead in 2022, especially with rising interest rates and soaring inflation, but borrowing rates remain exceptionally low and rents are soaring. People are more keen than ever to get out of the rental market and own and that will be a major driver of transactions in 2022.”