The latest HMRC property transactions data shows that the provisional non-seasonally adjusted estimate of the number of UK residential transactions in January 2023 is 77,390, 7% lower than January 2022 and 27% below December 2022.

The data also reveals that the provisional seasonally adjusted estimate of the number of UK residential transactions in January 2023 is 96,650, 11% lower than January 2022 and down 3% on December 2022.

When compared to pre-pandemic, in January 2020, 97,310 residential transactions were registered, suggesting that current completion rates are similar to this.

Industry reactions:

Lucian Cook, head of residential research at Savills, commented: “While 7% below the same month last year, today’s housing transaction numbers from the HMRC remain surprisingly robust. The turmoil we saw in the mortgage markets in the last three months of 2022 are yet to fully feed through into sales completions.

“Nonetheless given what has happened to mortgage approvals, the numbers still point to a market where equity rich and cash buyers have the upper hand, while first time buyers and mortgaged buy to let investors bear the brunt of higher mortgage costs.”

Matthew Thompson, head of sales at Chestertons, said: “In January, our branches noticed a 25% increase in viewings compared to the same month last year. Whilst buyer demand remained strong, the number of market appraisals has been comparably low as some sellers continued to observe how the market is developing in the first quarter of this year. With fewer properties coming onto the market at the moment, there is a degree of ‘buyer frustration’ starting to build; especially amongst those who are keen to move as soon as possible.”

Iain McKenzie, CEO of The Guild of Property Professionals, commented: “A dip in transactions is to be expected at this time of the year, following a rush to complete in time for Christmas and avoid the paperwork in January.

“A slowdown in sales isn’t necessarily bad news for agents, as they have time to pause and replenish the stock they have available to buyers.

“It is possible that buyers are adopting a wait-and-see approach to the market with the expectation that house prices will see substantial falls, however the market continues to defy expectation with house prices holding steady for the time being.

“Prospective buyers being hit hard by the cost-of-living crisis may be deciding to sit on their deposit a while longer. As better mortgage deals return to the market and inflation slowly falls to manageable levels again, we should see demand pick up again.”

Jason Tebb, CEO of OnTheMarket, said: “As expected, transaction levels dipped in January compared with December, and were also down on January 2022, as the housing market continues to rebalance.

“That said, buyer and seller confidence seems to be holding up remarkably well, which may be partly down to the clear direction that the government and Bank of England have set out in terms of dealing with inflation and its impact on interest rates. The upheaval of September and October has given way to increased calmness, with inflation looking as though it may have peaked. Interest rates may have a little higher to go but the markets are also suggesting they may be close to their peak, if not there already.

“As the market adjusts to something closer to what it looked like pre-pandemic, all this underlines the importance of sellers pricing their homes correctly. People need to move for different reasons, and that isn’t going to change even if conditions are tougher, but properties must be priced correctly now more than ever.”

Andy Sommerville, director at Search Acumen, commented: “As we look at the first property transaction figures of 2023, we see a continuation in the trends seen towards the end of last year, as volumes decline against the great heights witnessed in the early months of 2021 and 2022 – a time when the industry raced to catch up with unprecedented demand. Comparatively, times today feel exceptionally tough for the market, reflected in declining consumer confidence as the cost-of-living crisis beds in via ever increasing bills and high borrowing rates.

“A green shoot of hope is the better-than-expected macro-economic figures, allowing the UK to avoid a recession, albeit within in hairs breath. This has given banks more confidence to lend, and homeowners the motivation to keep going with their move. With the Budget approaching and a new housing minister in place, looking ahead we hope that the property industry may receive the stability it has been craving for some time.

“Commercial property transactions are seemingly outpacing residential at present, however we’ve seen, for example, office spaces rapidly decrease in value over the last few months which might not be reflected in data until the Spring. The great unknown here is the effect of what more Land Registry strikes will have on transaction volumes in future datasets, putting added strain on this public service which may cause details in registrations. What this means for conveyancers, and every stakeholder within an ongoing transaction, is that they need to stay one step ahead.

“As the number of transactions mellow, conveyancing firms will, more than ever, need to maintain their competitive advantage, where no firm can afford to lose momentum. With increasingly complex transactions, longer chains, and greater risks, how each firm fares in the months ahead will be defined by how streamlined their transaction process can be and their continued investment in tech innovation as a tool for efficiency and cost saving in challenging times. We already have technology to digitise property data and automate the transaction process through AI, taking tasks that took weeks, and delivering them in seconds. As we continue to see the trends of 2022 ushered into a new year, now more than ever the property sector needs to embrace technology to future-proof businesses, keep markets moving, and support everyday buyers and sellers facing significant financial pressures.”