UK residential property transactions fell by 12.6% year-on-year and were 22.2% lower compared to the prior month, January data from HMRC has revealed.
The provisional non-seasonally adjusted estimate also showed that there were 85,520 residential property transactions.
HMRC said that the provisional figure was similar to pre-pandemic levels, when transactions reached 83,840 in January 2020.
Gov’t: SDLT transactions in Q4 fell 10%
It added that there had been a gradual increase in residential transactions since the COVID-related slump during the spring of 2020, highlighting “large peaks in March, June, and September 2021” as taxpayers sought to complete transactions before temporarily increased nil rate bands of SDLT, LBTT and LTT ended.
According to the seasonally adjusted estimate, residential transactions were 10.6% lower, down to 106,990, compared to a year ago over the same period, but 5.1% higher than December 2021.
Regarding non-residential transactions (namely commercial property, agricultural land as well as six or more residential properties bought in a single transaction), these were 21.6% higher year-on-year at 9,070, but 18.1% lower compared to December for non-seasonally adjusted transactions – similar to levels reported before the pandemic, such as in January 2020, when there were 9,000 transactions.
For seasonally adjusted non-residential transactions, these increased to 10,000 – 13.8% higher than January 2021 but 2.5% lower than December 2021.
In response to the data, Stuart Wilson, corporate marketing director at more2life, said it was “encouraging” to see that the market had maintained its momentum through to the new year.
“This should be a strong opening quarter, with house-hunters keen to lock into competitive rates before interest rates creep up any further and older homeowners look to augment their retirement income for the year ahead,” he said.
Against the backdrop of rising house prices and inflationary pressures, he added that homeowners were increasingly using equity release to help their families on to the property ladder.
He said: “One in five plans taken out in 2021 was used to support family members, with older borrowers gifting £58,734 on average to help loved ones buy their first home. While this trend may have been kickstarted by the stamp duty holiday, it certainly looks to have cemented itself as a permanent feature of the market.”
For his part, Colin Bell, co-founder and chief operating officer at Perenna, said that while there was cause for celebration for the strong demand, there was a “significant elephant in the room” in the form of house price inflation.
“There are many positives to a strong and stable buyer appetite, but not when it causes homeownership to slip out of sight for a large proportion of a generation. Macro statistics like this do hide underlying concerning statistics at a micro level.
“Long-term fixes will be key to recovering from this affordability crisis as they help buyers to spread their repayments over a longer period and reduce the risk to lenders. Offering more high loan-to-income and low-deposit mortgages will also aid these underserved house-hunters.”
Legal & General Mortgage Club’s director, Kevin Roberts, was more bullish, and said the property market was enjoying “its strongest start to the year since 2005”.
He said: “Relatively modest interest rates and the high availability of mortgages have also ensured that the market remains buoyant amidst strong house price growth and wider inflationary pressure.”
He advised anyone looking to move in the next few months to approach an independent mortgage adviser and lock into a top deal as rates and affordability rules “are likely to shift”.
Paul Stockwell, chief commercial officer at Gatehouse Bank, however warned that the short supply of homes for sale would likely “hold back significant growth in sales volumes in first part of 2022”.
He said: “Property transactions have settled back to their pre-pandemic levels, and the short supply of homes for sale is likely to hold back any significant growth in sales volumes in the first months of this year.
“Despite the supply problems, there’s still plenty of buyer demand, with would-be buyers queueing up to view properties. Hopefully, sellers will start to enter the market in greater numbers in the spring, for what is traditionally a busy period for housing.
“We are still seeing high demand from buyers, despite the wider economic uncertainty from inflation, which points to the strength and resilience of the property market. That said, it’s unlikely we’ll see transaction levels in 2022 reach the highs achieved last year.”