Figures from HMRC showed that on a non-seasonally adjusted basis, there were 79,880 residential property transactions. This was 3% lower than a year ago and 24% down on the previous month.
An unsurprising dip as the market finds its footing
Nicky Stevenson, managing director at Fine & Country, said a “modest dip” in sales at the start of the year was “not especially surprising” as January was typically quiet.
She added: “Households reassess budgets and work routines in January, so a 5% monthly fall therefore points more to seasonal patterns than any loss of confidence in the market.”
Stevenson said it was encouraging that property transactions were only marginally lower than last year, as it suggested that “the market has remained broadly steady, with demand holding up”, adding: “This time last year, there was a frenzy of activity in the market given the changes to stamp duty that took place in April 2025.”
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Stevenson said momentum was building again and the spring market should be busier.
Tom Bill, head of UK residential research at Knight Frank, said: “Transaction numbers were 5% below the five-year average in January as the impact of November’s Budget continued to reverberate. Activity should recover in coming months as plans put on hold are reactivated and mortgage rates head lower.”
Ian Futcher, financial planner at Quilter, said 2025 ended on a steady footing, but the market now seemed “increasingly sensitive to what happens with mortgage pricing over the coming months”.
Futcher said: “If inflation continues to cool, there is a realistic prospect that average mortgage rates could drift lower through the spring and summer. That would gradually improve affordability and could release some of the pent-up demand that has been sitting on the sidelines since early 2024.
“The opportunity for the market in 2026 is that even modest reductions in mortgage rates would have a disproportionate confidence effect after two years of elevated borrowing costs. If the rate path moves in the direction many expect, today’s stability could finally tilt into a gentle recovery.”
Ryan McGrath, director of second charge mortgages at Pepper Money, said: “The dip in transactions at the start of the year reflects a market that is still finding its footing. January data often carries the legacy of decisions made late last year, and in this case, it likely captures the caution we saw in the run-up to the Autumn Budget, combined with the usual seasonal slowdown around the turn of the year.”
McGrath said the data did not fully reflect the improvement in sentiment that followed greater clarity on rates and inflation.
“With price pressures easing and mortgage pricing gradually softening, the broader fundamentals are becoming more supportive, even if activity remains uneven month to month,” he added.
