2016 was the busiest year for housing since 2007 as 1.24 million people moved home, figures from HMRC show.
This represented a slight increase from 2015’s total of 1.23 million but was still well below the 2007 total of 1.61 million.
The rush to get deals done before the 3% stamp duty surcharge came into force in April 2016 skewed the market, as transactions rose by 39.9% year-on-year in Q1 2016 but fell by 13.7% in Q2, 5.9% in Q3 and 9.4% in Q4.
Andy Knee, chief executive of LMS, said: “The forthcoming months will test the strength of the housing market, which has demonstrated remarkable resolve, since the vote to leave the European Union.
“Record low mortgage rates will not last forever. Borrowing costs will become less affordable, ultimately contributing to a slow-down in activity as buyers adjust.”
The December transaction count rose by 5.2% from November to 109,100 but was 4% lower than 113,690 in December 2015.
Stephen Wasserman, managing director of West One Loans, said the results represent a “reality check”, while Ishaan Malhi, chief executive and founder of online mortgage broker Trussle, was downbeat about the state of the market.
Wasserman said: “The economic road of the past few months has been bumpy and, while this looks set to continue, it’s encouraging to see that the UK’s property market is demonstrating such resilience.
“In times of prolonged economic uncertainty, it’s imperative that the industry responds and makes diverse and flexible financing options available for property purchasers.
“This will help support chains and facilitate new deals.”
And Malhi said: “Property transactions may have increased in December, but the number of homes being bought and sold is still significantly down from last year.
“Stamp duty rises may have exaggerated the decline, but the underlying issue is that there are simply too few homes to go around.
“This is pushing prices up at a rate which is completely out of step with wage growth and consumer spending power, and aspiring homeowners are being left behind.”
However Jeremy Leaf, north London estate agent and a former RICS residential chairman, thought the results showed the market has remained strong.
He said: “The number of transactions recorded in December is encouraging because it reflects what we have been saying for some time – that the end of 2016 showed the housing market was much more resilient than many gave it credit for and augurs well for the forthcoming first quarter.
“However, the interesting point that these figures raise is the impact of a change in stamp duty on the number of transactions.
“What we want to see is activity, not price boom and bust, and the numbers show that even a small change in stamp duty can have a disproportionate impact on the number of sales.”
Stephen Smith, director of Legal & General Housing Partnerships, looked ahead to the government’s housing white paper.
He said: “Two key factors are hindering the housing market from reaching its full potential.
“The first is the ever-expanding gap between supply and demand, and the second is the increasing disparity between wage inflation and house price inflation. These two components need to be resolved if we are ever going to see the return of a healthy and stable housing market.
“The government has promised our industry a housing white Paper, which is due to be announced shortly.
“This focus on housing is certainly welcome, but what we really need is definitive yet realistic housebuilding initiatives that will enable us to meet the government’s target of building one million new homes by 2020.
“In the shorter-term, other incentives such as stamp duty breaks could also be well utilised by the government to encourage more fluidity across the market.”
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