House sales fell to a decade low in January

UK house sales in January fell to their lowest level, outside of the pandemic, for a decade, according to official figures published this morning.

Figures produced by HM Revenue and Customs for residential transactions found that just 77,390 house sales were completed in the month, the lowest level since the start of 2013 – aside from the temporary drop off seen during the start of the 2020 covid lockdown when the market was effectively shut.

The figure was a 27% fall on the number of sale completions seen in December, and 7% below the figure seen in January 2022. January is typically the slowest month in the year for completions after the Christmas drop-off in the home buying market.

Seasonally adjusted, the HMRC said the number of residential transactions were just 3% lower than December 2022, but were actually 11% below the January 2022 figure – and the lowest seasonally adjusted January number since 2015.

The fall in transactions follows the collapse in confidence in the property market in the wake of last year’s disastrous mini-budget, which prompted a spike in mortgage rates and sharp drop off in home buying activity. However, in recent weeks housebuilders have said they have been encouraged by visitor levels and reservations at sites, which have not been as low as feared.

Jonathan Hopper, CEO of Garrington Property Finders, said the 27% drop in home sales between December and January was “sobering”, but that the evidence suggested buyers were slowly returning to the market. He said: “While further price softening is likely in 2023, the tumbleweed months at the end of last year that led to January’s sharp fall in completed sales are thankfully past.

“With mortgage rates settling down and inflation cooling slowly, buyers are steadily returning to the market. Granted, most of them are in the ‘need to move’ rather than the ‘want to move’ camp, but sentiment is improving”.

Lucian Cook, head of residential research at Savills, said the seasonally adjusted housing transaction fall shown by the HMRC numbers showed a “surprisingly robust” picture. He said: “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.”