The provisional non-seasonally adjusted estimate of UK property transactions was also down 7% from the January 2022 figure, according to HM Revenue & Customs (HMRC).

Meanwhile, the seasonally adjusted estimate, which provides a more accurate picture of the housing market, recorded 96,650 property sales in January 2023. This is 11% lower than the year earlier, and 3% down on the previous month of December 2022.

According to property and finance experts, this is the slowest start to the year in a decade.

Even HMRC said UK residential transaction figures had been “stable” in recent months, but a decline in numbers was starting to become apparent. 

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

For the financial year to date – April 2022 to January 2023 – seasonally adjusted residential transactions totalled 1.02 million compared to 1.15 million during the same period a year ago. 

‘Property sales moved at a glacial pace’

Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “Property sales plummeted in January, making it the slowest start to the year in a decade. Buyers packed up and scarpered – spooked by the hike in mortgage rates in the autumn.

“We saw the slowest January in ten years, as the impact of the mini-Budget fed through into sales figures. And while there’s some lingering optimism that lower mortgages may tempt some buyers back, the heady days of the peak – where at one point we saw more than 214,000 transactions in a month – are well and truly behind us.

“This end of the year is always pretty slow, but this January, property sales moved at a glacial pace, and they’re unlikely to gain much more momentum for some time to come. The RICS Residential Market Survey has charted seven months of falling numbers of agreed sales – since June – and while the pace of the decent slowed in January, it’s still heading south.”

Coles added it is taking around three and a half months for agreed sales to translate into completed ones, “so even if buyers have been buoyed by falling mortgage rates in the past few weeks, we’re not going to see any evidence of this until the spring. Even then, its going to be a far cry from the hectic flurry of sales we have grown increasingly used to.”

House prices could follow transactions 

Karen Noye, mortgage expert at Quilter said the pace of transactions “will serve as a canary down the mine for house prices” and if the number of transactions drop significantly, “it is likely that house prices will go with them as supply outstrips demand”.

Noye said: “These statistics are the first that take into account the fallout from the mini-budget and therefore the huge rise in mortgage rates post event. However, since then rates have significantly dropped after their peaks towards the back end of next year which might help keep transactions at least stable as people continue to cautiously enter the market feeling the worst is now behind them.

“Although the cost-of-living crisis is certainly hurting people’s finances, some of the worries about a huge house price crash may have been averted and while transactions and house prices are falling, they may avoid anything akin to 2008. However, while the outlook is certainly more predictable than it was back in December, it is still going to be financially difficult for millions and this will undoubtedly have an impact on the number of people choosing to move house.”