The latest figures from HMRC show that UK residential property transactions reached 94,680 in January 2026 on a seasonally adjusted basis, marginally down (by less than 1%) on January 2025 and 5% lower than December 2025.
Property professionals say the modest dip reflects a seasonal slowdown and continued economic caution rather than a loss of underlying demand. With inflation easing and expectations growing that the Bank of England could move to reduce the base rate in the coming months, many believe market activity could regain momentum as confidence builds into the spring.
Ian Futcher, financial planner at Quilter:
“Residential transactions ended the year on a steady footing, and the market now looks increasingly sensitive to what happens with mortgage pricing over the coming months. December’s seasonally adjusted total slipped by less than 1% on the month to 100,440 but remained 5% higher than a year ago, which is broadly consistent with the stable pattern we have seen since the summer. The non-seasonally adjusted figures tell the same story, rising 1% on the month and 7% on the year, despite stretched affordability.
The direction of mortgage rates is now central to whether residential activity can break out of this tight range. Lenders have already been trimming fixed‑rate deals in anticipation of Bank of England cuts later this year, and the market is increasingly priced for a gradual easing cycle. If inflation continues to cool, there is a realistic prospect that average mortgage rates could drift lower through the spring and summer. That would gradually improve affordability and could release some of the pent-up demand that has been sitting on the sidelines since early 2024.
For now, though, households remain cautious. Buyers are waiting for clearer evidence that further rate cuts are approaching and that any downward momentum in mortgage pricing will be sustained rather than tactical. The resilience in December’s numbers suggests transactions are being driven by need rather than opportunism, but an improving rate outlook would provide exactly the confidence boost required to lift activity out of its holding pattern.
The opportunity for the market in 2026 is that even modest reductions in mortgage rates would have a disproportionate confidence effect after two years of elevated borrowing costs. If the rate path moves in the direction many expect, today’s stability could finally tilt into a gentle recovery.”
Nathan Emerson, CEO at Propertymark, comments:
“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.
We are starting to see many key elements of the housing market once again moving in better harmony, although there are still challenges to overcome. Earlier this month, we observed the rate of inflation dip downwards to 3%, giving hope the Bank of England may feel confident enough to potentially lower the base rate next month when the Monetary Policy Committee next meet.”
Tony Hall, Head of Business Development at Saffron for Intermediaries, said:
“A modest dip in transactions at the start of the year is not entirely unexpected following stronger activity late last year. Buyers are still adjusting to rate expectations, and some caution remains. However, lender competition is robust, especially in specialist markets. We’re seeing ongoing demand from borrowers with more complex income streams, who continue to seek tailored solutions despite short-term fluctuations.
As expectations of further interest rate cuts build into 2026 and the outlook becomes clearer, professional advice will remain key to helping borrowers navigate change and access the most suitable deal.”
Colin Bradshaw, CEO at TwentyCi, says:
“A marginal dip in transactions highlights the persistent friction in the market as we navigate the fallout of the 2025 fiscal changes. While the macroeconomic ‘noise’ is beginning to settle – with inflation finally tracking back toward the 2% target – the reality for many movers remains one of cautious affordability. This, coupled with the recently announced ‘Mansion Tax’, has created a natural cooling effect – particularly in premium properties where we’re seeing more buyer caution than other areas of the market.
However, buyer enquiries in the mainstream remain robust, which suggests there is a significant amount of latent demand. Once the current political and inflationary uncertainty fully clears, this pause could quickly turn into a surge. For lenders, the year ahead remains one of significant opportunity as these hesitant buyers eventually ease off the brake with confidence.”
Maria Harris, chair of the Open Property Data Association, on this morning’s HMRC property transaction data:
“The fall in transaction activity in January was unexpected and suggests that some of the UK’s economic issues are impacting home-moving decisions in the short-term. A buoyant housing market is important for the wider economy, providing a boost for lenders, brokers, estate agents, proptech firms and conveyancers, and so it’s important that confidence returns quickly to the market.
At the Open Property Data Association (OPDA), we believe the fall in activity highlights the urgent need to modernise the underlying property data ecosystem. We know people are more likely to move when the process is more seamless.
That is why establishing a smart data trust framework for the property sector is crucial. A secure, governed trust model will enable trusted participants to access standardised, interoperable, digitised data in real time. This would reduce fall-through rates, cut transaction times, improve fraud mitigation, and enhance transparency for consumers.
A well-designed smart data framework would not only support higher transaction volumes but also make the system more resilient, efficient, and equitable. As the market gathers momentum, now is the moment to ensure our property data infrastructure is fit for purpose and ready to support sustainable growth.”
Richard Pike, chief sales and marketing officer at Phoebus Software, commented:
“The rise in later life lending announced by UK Finance reflects the growing importance of this sector within the wider mortgage market. Today’s figures show that later-life lending accounted for 8% of all residential mortgage lending in Q4 2025.
With people living longer and facing more complex financial needs in later life, these products provide a crucial solution for those looking to unlock property wealth. This is no longer a niche area, and the Financial Conduct Authority has set out plans for a focused later-life lending market study.
While some mainstream lenders are starting to offer later life products, the sector’s growth is being led by specialist lenders, and we’re hearing from our account servicing clients that they expect the market to continue to grow in 2026.”
Nick Leeming, Chairman of Jackson-Stops, comments:
“January’s data shows the first notable dip in activity since the summer, suggesting a slight cooling in momentum. Buyers remain cautious following a period of instability towards the end of Q4 last year, which has tempered confidence across the market.
Despite this, some completions have rolled over from H2 2025, and we should see these expressed in the data in the coming months.
Momentum is building beneath the surface, particularly in northern markets. Our Alderley Edge branch, for example, saw exchanges double in January, showing that committed buyers are returning.
Demand remains selective and value-driven. Homes priced accurately are attracting competitive interest and progressing to exchange, while over-ambitious pricing is likely to slow the sale process.
The wider economic picture is becoming more supportive. Falling inflation and the prospect of a Bank of England base rate cut next month should ease borrowing costs and improve access to finance.”
Nicky Stevenson, Managing Director at Fine & Country, comments:
“A modest dip in property sales at the start of the year is not especially surprising. January is traditionally a quieter period for the market, as many buyers and sellers take a breath after Christmas before turning their attention back to moving plans.
Households reassess budgets and work routines in January, so a 5% monthly fall therefore points more to seasonal patterns than any loss of confidence in the market.
The fact that transactions are only marginally lower than they were a year ago is actually an encouraging sign. It suggests the market has remained broadly steady, with demand holding up. This time last year, there was a frenzy of activity in the market given the changes to Stamp Duty that took place in April 2025.
With the festivities a distant memory now, there are signs that momentum is beginning to build again as we move into the spring. Buyer interest typically returns once January is out of the way, and both asking price activity and demand picked up at the start of the year, which should support a busier spring market.
For sellers, this is a reminder that serious buyers are still there, even in a quieter month. The homes that are priced correctly and presented well are continuing to attract attention. Now is the time to get your home in a state that is ready to put on the market.”
Hamza Behzad, Business Development Director at Finova, says:
“A slower market is no cause for alarm, but it may point to a lack of momentum. Despite a strong choice of low-deposit mortgages and a base rate at its lowest level since early 2023, affordability pressures and economic uncertainty are weighing on buyer confidence. For many households, improved product choice alone isn’t enough to offset higher living costs and tightening household budgets. However, there is ray of hope. Big market players are cutting rates by up to 0.2%, and these rates could edge down further in March.
As rental prices climb and rates ease, monthly mortgage repayments are now comparable to, and in some cases lower than, the cost of renting. For first-time buyers who were previously priced out — and for movers who paused plans during economic uncertainty – the equation has changed. While some will still struggle with affordability, buying is becoming a more realistic option.”
Simon Webb, managing director of capital markets and finance at LiveMore, commented:
“It’s encouraging to see momentum building across other non-equity release later life lending products. This signals a broader shift in awareness, with the market increasingly recognising the full spectrum of options available to older borrowers.
The over-50s market represents a significant growth opportunity for brokers, particularly as alternatives to equity release gain traction. Brokers do not require additional qualifications and permissions to advise on products such as Retirement Interest-Only (RIO) and Term Interest-Only (TIO) mortgages. And, while many older clients may have more complex finances, identifying the right solution is no longer the challenge it once was. With the appropriate sourcing platforms and clearly defined criteria, brokers can efficiently navigate affordability and product suitability.
At LiveMore, our Mortgage Matcher® technology simplifies this process. In just a few easy steps, it presents a tailored range of suitable products alongside the maximum borrowing amount available.”
Commenting on HMRC UK Property Transactions, Joe Pepper, CEO of PEXA UK, said:
“The drop in UK property transactions in January should be seen in the context of broader market dynamics. 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 soars. Not only will those already itching to buy kickstart the process, but a drop in rates and easing inflation will also 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. That all sounds positive for the market and the economy, and it is. But it will also place 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.”
