There were 82,000 residential property transactions in January 2024, 12% lower than in January 2023.
It was the worst January for sales in a decade.
However, transactions were still up by 2% compared to sales in December 2023, said HMRC, which is the first monthly increase in six months.
Karen Noye, mortgage expert at Quilter, said: “Much of the month-on-month uptick can be attributed to the lowering of mortgage rates seen at the start of the year. Mortgage rates have since been increasing after the period of welcomed decline, which could cool the market further.”
Sarah Coles, head of personal finance at Hargreaves Lansdown, added: “It seems to fly in the face of the fresh optimism that breezed into the market at that time – on the back of lower mortgage rates. However, it reflects the lag in these figures.
“It takes between three and four months for a property to go through the tortuous sales process, and for agreed sales to be completed. As a result, January figures reflect sales agreed as early as October.”
Looking ahead
Noye said that the Bank of England’s (BoE’s) interest rate decisions would have a big impact on home sales over the rest of the year.
She explained: “If the Bank begins lowering its base rate later this year as expected, it would present a more favourable borrowing landscape. Such a move would see a reduction in mortgage rates, which could pull prospective buyers out of ‘wait and see’ mode and accelerate the housing market’s recovery.
“Reigniting the property market is something the Government is likely exploring ahead of its Spring Budget next week. Rumours of the return of 99 per cent mortgages could be its attempt to get more first time buyers into the market, which could help boost transactions further up the chain too.”
Coles agreed that there was reason for cautious optimism.
She added: “The picture has improved considerably, with mortgage rates dropping, buyer and seller numbers growing fast, and increasing numbers of sales agreed. The BoE has seen a pick-up in the number of mortgages approved in January – which should filter through into more sales in the spring.”
Nick Leeming, chair of Jackson-Stops, suggested changes could be planned for the housing market in next week’s Budget. He explained: “Rumours are already circulating of new mortgage schemes, potential tax cuts, and other ways of stimulating the economy and inspiring consumer confidence.
“Homeownership, and the journey to it, continues to be one of the most divisive issues as the UK defines itself as Generation Buy and Generation Rent. In recent days, the possibility of 99% mortgages for first-time buyers, downsizing incentives and promises to ‘turbocharge’ housebuilding have become more prominent, though everything is still to play for until the Chancellor approaches the lectern on Wednesday.”
