House sales have got off to the weakest start to the year since 2015, HM Revenue and Customs (HMRC) figures indicate.
The number of house sales taking place in January 2023 was 11% lower than the same month a year earlier.
Across the UK, an estimated 96,650 transactions took place, which was 3% lower than in December 2022.
It was the lowest number of house sales recorded for the month of January since 2015, when 94,150 transactions were recorded.
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
Lucian Cook, Savills
Jeremy Leaf, a north London estate agent, said: “The fall in this key bellwether for the market seemed almost inevitable as it reflects the decline in not just the number but pace of sales which we saw in our offices immediately following the mini-budget and the resultant sharp rise in mortgage costs.
“Confidence takes a long time to build and can disappear very quickly, but it is slowly growing in response to reductions in those mortgage rates and inflation, as well as continuing employment stability.”
Lucian Cook, head of residential research at estate agent Savills, said: “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.”
Some 1,029,580 house sales have taken place in the financial year to date, between April 2022 and January this year, according to HMRC.
This is lower than the 1,154,360 house sales which took place over the same period a year earlier but higher than the 872,200 sales taking place between April 2020 and January 2021, in the early months of the coronavirus pandemic.
Mortgage rates jumped following the mini-budget last autumn, but since then there have been signs of rates in the fixed-rate mortgage market settling down.
However, rises in the Bank of England base rate have been pushing up borrowing costs generally and households have also been squeezed by rising everyday living costs.
The past two years have been marked by policy changes, economic volatility, and unserviceable levels of buyer demand
Nick Leeming, Jackson-Stops
Nick Leeming, chairman of estate agent Jackson-Stops, said: “Overall, these figures indicate that transaction volumes are steadying across the board, on par with volumes seen pre-pandemic, signalling an end to the days of erratic swings in completions.
“The past two years have been marked by policy changes, economic volatility, and unserviceable levels of buyer demand, (whereas) now the market appears to be finding its balance.
“House prices are also finding their new balance, which has given broader opportunities to would-be buyers, and will be key to keeping transactions buoyed in the coming months.
“With mortgage rates continuing their descent following the highs of late last year, now more closely in line with the current Bank of England base rate of 4%, this backdrop will provide some comfort for buyers.”
Rich Horner, head of individual protection at MetLife UK, said: “Property transactions continue to cool month-on-month as hopeful movers and buyers feel the impact of the cost-of-living crisis.
“Times are tough for many and as a result we are seeing more choosing to sit tight rather than make a property-sized financial commitment, particularly with a background of surging mortgage rates.
“However, with average house prices on the decline and the potential for rates to start to fall, there’s every chance we may see a market resurgence later in 2023.”
Jason Tebb, chief executive officer of property search website OnTheMarket.com said: “The upheaval of September and October has given way to increased calmness, with inflation looking as though it may have peaked.”
Jonathan Hopper, CEO of Garrington Property Finders, said: “So far the correction has hit transactions much harder than prices.”
Iain McKenzie, CEO of the Guild of Property Professionals, said: “As better mortgage deals return to the market and inflation slowly falls to manageable levels again, we should see demand pick up again.”
Lewis Shaw, founder of Teesside-based mortgage broker, Riverside Mortgages, said: “We’re expecting 2023 to be much like 2019, namely: normal.”
