According to seasonally adjusted figures from HMRC, this was also a three per cent decline on December’s activity.
On a non-seasonally adjusted basis, HMRC recorded 77,390 transactions during January. This was a seven per cent fall annually and a 27 per cent decline on the previous month.
HMRC said UK residential transaction figures had been “stable” in recent months, but a decline in numbers was starting to become apparent.
“Residential transactions are similar to pre-coronavirus levels, for example the provisional seasonally adjusted estimate in January 2023 is 96,650 compared to 97,310 in January 2020,” the report added.
For the financial year to date, April 2022 to January 2023, seasonally adjusted residential transactions totalled 1.02 million compared to 1.15 million during the same period a year ago.
Still a strong market
John Phillips, national operations director at Just Mortgages said: “These transaction figures show us that the housing market is continuing to defy the critics and doom-mongers.
“Significant pressure on household budgets from high inflation, rising mortgage rates and cost of living increases have failed to stall the housing market and transactions have remained robust.”
Phillips said with a million borrowers were set to switch onto a new rate this year, it was time for brokers to show their worth.
He added: “The greatest threat for mortgage borrowers in 2023 is apathy and meekly accepting a lender’s transfer rate without contacting a broker who can shop around to ensure they are on the best available deal.”
Gareth Lewis, commercial director MT Finance, said it was “encouraging” that transaction volumes were similar to pre-pandemic levels.
He added: “But, on the other hand, transaction levels are nowhere near where they need to be. We still need to find a way to stimulate the market and enable more people to buy property, as many are struggling with affordability. There isn’t an easy solution but something has to be done to enable more people to get onto the first rung of the ladder.”
The ‘wait and see’ approach
Mark Harris, chief executive of SPF Private Clients, said: “Transaction numbers dipped as buyers waited to see what would happen with mortgage rates.
“However, we are not necessarily out of the woods just yet and we expect to see pricing go up and down over the next few months with no visible trend. Swap rates, which underpin the pricing of fixed-rate mortgages, are jumping around, with five-year swaps falling as low as 3.25 per cent two weeks ago but they are now back up at 3.75 per cent.
“Borrowers may be tempted to wait for rates to fall further but there is a danger that they might not and trying to predict interest rates can be a dangerous game.”
Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, said the drop in transactions was expected due to the aftermath of the mini Budget. She added: “This trend looks set to continue for some time yet as the ripple effect of the Trussonomics era continues. However, there is still demand out there and transactions are continuing to take place, just at a lower level compared to this time last year.”
Sofia Jones, managing director at Penny House, echoed this saying the decline was “baked in given the impact of the mini Budget”.
She added: “Looking forward, I think we will see less of a property crash than a correction.”
