Property transactions were down 22.2 per cent in January compared to December, as experts suggest the market is beginning to slow down.
HM Revenue & Customs published the latest estimates for UK residential transactions today (February 22), which counted 85,520 house sales last month.
The decline in transactions follows a year of double-digit house price growth which made 2021 the strongest year for growth since 2006.
Karen Noye, mortgage expert at Quilter, said these figures are “illustrating a market that is finally starting to slow”.
She added that in spite of the pandemic, over the past two years the housing market has “ignited like never before” and the rush to buy has been a major contributing factor to the record house prices the market is currently seeing.
Noye said: "It now feels like we are in a very different fiscal position with inflation and a cost-of-living crisis squeezing people’s finances and interest rates also on the rise.
"While there will be residual movement in the housing market as a result of people still adjusting to post-pandemic working rituals there will likely be an inevitable slow down over the next year.”
Bob Riach, a Lincolnshire-based broker, said he understood the figures going down. In Scunthorpe, where his business is based, lenders are down-valuing properties which have been outbid at offer stage.
He had one client who bid £5,000 over a £180,000 asking price. But when they applied for a mortgage to cover the offer, the house was down-valued to £180,000, meaning the client had to foot the extra £5,000 upfront.
“It’s slowed the market down,” said Riach. “Properties are falling through so estate agents want to see there’s extra money in the bank.”
Tomer Aboody, director of property lender MT Finance, said the shortage of properties on the market was continuing to fuel higher prices, with multiple buyers per property on many occasions.
“This time last year, buyers had the stamp duty holiday to spur them on; now there are fewer sellers brave enough to put their properties on the market as they are fearful that they will not be able to buy themselves,” he explained.
“Many are selling up and moving into rented accommodation in order to put themselves in the strongest position by being cash buyers, which in turn is also pushing up rents.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said the fall in transactions last month is “a noticeable dip”.
He added: “Borrowers remain keen to take advantage of cheap mortgage rates as rising inflation suggests that more interest rate rises could be on the cards. However, finding the property they want to buy could be the big challenge.
“Even if the Bank of England raises the base rate again at its next meeting, it looks as though we will remain in an ultra-low interest cycle for the foreseeable future and any increase in mortgage costs will be slow and steady.”
ruby.hinchliffe@ft.com
