The slowing of the housing market is confirmed in the latest figures from HMRC, which show property sales dipped in January.

Higher mortgage rates coupled with increased inflation and the cost of living crisis are affecting the amount of property deals.

A non-seasonally adjusted estimate of the number of UK residential transactions in January is 77,390, 7% lower than January 2022 and 27% lower than December.

And the seasonally adjusted estimate of the transactions in January is 96,650, 11% lower than January last year and 3% lower than December.

The levels of current monthly property transactions are similar to those in early 2020, before the Covid pandemic.

“Towards the end of last year mortgage and interest rates increased and we are starting to see the impacts of those changes within these statistics,” HMRC says.

“Both seasonally and non-seasonally adjusted residential property transactions appear to be depressed, indicating a possible slowing of the housing market.”

Industry reaction

Jason Tebb, CEO at OnTheMarket, says: “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.”

Nick Leeming, Chairman of Jackson-Stops, says: “Overall, these figures indicate that HMRC 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, where 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.”

Gareth Lewis, Commercial Director of MT Finance, says: “Volumes are relatively similar to pre-pandemic levels, which is encouraging in one sense as the fluctuations caused by stamp duty incentives have disappeared.

“But on the other hand, transaction levels are nowhere near where they need to be. We still need to find a way to stimulate the market and enable more people to buy property, as many are struggling with affordability.

“There isn’t an easy solution, but something has to be done to enable more to get onto the first rung of the ladder.”

Jeremy Leaf, north London estate agent and former RICs residential chairman, says: “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.”