The latest property market transaction figures published by HMRC are not reflective of the current market conditions and represent the last of the hangover from the uncertainty created by the autumn budget and the run up to the traditional December slowdown, property sector experts have said.
The provisional seasonally adjusted estimate of the number of UK residential transactions in January 2026 is 94,680, less than 1% lower than January 2025 and 5% lower than December 2025.
“The drop in UK property transactions in January should be seen in the context of broader market dynamics,” PEXA’s UK CEO Joe Pepper said. He added:
“These completions are reflective of transactions starting back in October or November. With a lack of housing reform in the autumn budget, it will not have inspired many people to get on the ladder, and a drop in inflation in November also left people hoping for a downward trajectory in borrowing costs heading into the new year.
“With the first rate cut of 2026 expected next month, and with the Bank of England signalling that inflationary pressures are likely to subside quicker than expected with further interest rate cuts on the cards, many prospective buyers are understandably postponing transactions in anticipation of cheaper borrowing costs and improved affordability. With more and more people waiting in the wings for better circumstances, there is an enormous pressure point building in the market: when the conditions change, demand to transact with soar.”
The sentiment was shared by Iain McKenzie, CEO of The Guild of Property Professionals, who said the statistics highlight a “modest seasonal slowdown rather than any underlying weakness in the housing market,” and Jason Tebb, president of OnTheMarket, who said the data reflects the “uncertainty created by pre-budget speculation”.
That period is now behind us, Tebb added, with the property portal seeing an increase in sellers coming to market which will “keep prices in check to an extent (and) further assist first-time buyers and boost transactions”.
Encouragingly, the broader economic backdrop is “becoming more supportive,” according to McKenzie. He explained:
“Inflation has eased to 3% in the year to January, its lowest level since March 2025, and, while still above the Bank of England’s 2% target, the downward trajectory strengthens the case for a base rate cut in the coming months. Combined with wage growth and improving mortgage affordability, this is laying the groundwork for renewed momentum.
“We are already seeing lenders respond to market expectations, with mortgage rates trending downwards. More attractive deals, particularly for buyers with larger deposits, should help unlock pent-up demand and encourage movers who delayed decisions during the final quarter of 2025.
“While transaction volumes may have softened at the start of the year, the outlook for 2026 remains positive. With house prices forecast to rise by a modest 3.3% and supply levels increasing, buyers will benefit from greater choice and improved negotiating power. As confidence builds and borrowing costs continue to ease, we expect activity to strengthen through the spring and summer, with sales volumes picking up as the year progresses.”
After the marginal five to four decision by the Bank of England’s monetary policy committee (MPC) to maintain interest rates at 3.75%, the first interest rate cut of the year could happen when the MPC meets again on 19th March.
Nathan Emerson, CEO at Propertymark, said the recent fall in inflation to 3% “gave hope” that interest rates could fall. He added:
“Despite an economy that still has challenges to overcome, it is reassuring to witness resilience in the number of completed housing transactions as we stepped into 2026, when looking at provisional seasonally adjusted figures. It has been pleasing to see Propertymark member agents report what has been an uplift in the number of first-time buyers completing on a property when comparing figures both month on month and year on year.”
The result of rate cuts will see mortgage rates drop and “release a swathe of mortgage prisoners who have been trapped on SVRs for far too long, unable to pass stringent affordability tests thanks to the cost of living over the last few years,” PEXA’s Pepper concluded. However, he warned a rise in demand would add “significant strain on the UK’s conveyancing infrastructure”.
“The processes that support conveyancers are simply not able to cope with more demand – the capacity of the sector is already maxed out, and without urgent investment the system will crumble. Not only do we need change to better support conveyancers who are trying to drive the best outcomes for their clients, but also to realise the clear potential of the market for the economy.”
