Slowest January in a decade for property sales as buyers ‘wait and see’

Homebuyers are taking a “wait and see” attitude as they expect “significant price drops” this year, it is claimed.

HMRC has published its monthly property sales for January 2023, which were 7 percent lower than January 2022 and 27 percent lower than December 2022, to 77,390.

It means that the non-seasonally adjusted numbers showed the lowest January transactions in a decade.

Iain McKenzie, from the Guild of Property Professionals, commented on the latest house price data by saying: ‘It is possible that buyers are taking a wait and see approach to the market with the expectation that house prices will fall significantly.’

Mr McKenzie added: ‘A sales slowdown is not necessarily bad news for agents as they have time to pause and replenish the stock they have available to buyers.

“The market continues to defy expectations with house prices remaining stable for now.

Prospective buyers hit hard by the cost-of-living crisis may decide to hold onto their deposits a little longer. As better mortgage deals return to the market and inflation slowly returns to manageable levels, we should see demand pick up again.”

The sudden rise in mortgage rates at the end of 2022, which followed the disastrous mini-budget of then Prime Minister Liz Truss, may also have caused potential home buyers to postpone or abandon their moving plans.

Sarah Coles, of asset management firm Hargreaves Lansdown, said: ‘Property sales plummeted in January, making it the slowest start to the year in a decade. Buyers packed their bags and freaked out – spooked by the rise in mortgage rates in the fall.

“We saw the slowest January in a decade as the impact of the mini-budget spilled over into sales. And while there is some lingering optimism that lower mortgages may lure some buyers back, the heady days of the peak – where we saw more than 214,000 transactions in a month at one point – are well and truly behind us.

“This end of the year is always pretty slow, but in January property sales were at a glacial pace and are unlikely to gain much momentum going forward.”

She went on to explain that it takes about three and a half months for agreed sales to turn into completed sales, so even if buyers have been buoyed by falling mortgage rates in recent weeks, there won’t be any evidence of this until spring.

“Even then, it will be a long way from the frantic sell-off we’ve become increasingly accustomed to,” she added.

Property sales plummeted in January, making it the slowest start to the year in a decade

During the pandemic, property prices were pushed up by a lack of supply and houses that came up for sale sold quickly. However, the amount of available inventory on real estate websites has now noticeably increased.

It comes after Rightmove revealed this week that asking prices rose by just £14 in the ‘smallest January increase in over 20 years’.

The average price of a new house for sale in the past month was £362,452 – £14 higher than the previous month, according to the real estate website.

This was the smallest increase Rightmove had recorded between January and February in records dating back to 2001, but it was still a 3.9 percent increase from a year earlier.

Buyers are said to be picking up properties again after confidence was rocked by the spike in mortgage rates as the market got off to a stronger-than-expected start to 2023.

But the number of sales agreed was still 11 percent lower than in 2019. This is an improvement on the 15 percent drop at the start of the year and the 30 percent drop in the wake of last fall’s mini-Budget .