Nationwide: Stamp Duty rush keeps house price growth high
Average house prices continued to rise in February but the annual rate of growth has slowed.
The latest Nationwide House Price Index put average UK house prices at £270,493.
The figure is up 0.4% on a monthly basis, higher than the 0.1% posted in January.
But the annual rate of 3.9% is down from 4.1% at the start of the year.
Commenting on the figures, Robert Gardner, Nationwide’s chief economist, said: “Looking ahead, the changes to Stamp Duty at the start of April are likely to generate volatility in transactions in the near term, as buyers bring forward their purchases to avoid the additional tax.
“This will likely lead to a jump in transactions in March, and a corresponding period of weakness in the following months, as occurred in the wake of previous stamp duty changes.”
Karen Noye, mortgage expert at Quilter, suggested the Stamp Duty changes will push prices up in the coming months.
She said: “With the upcoming changes to Stamp Duty in April, we could see this monthly uptick continue. The sharp rise in tax bills expected due to the lowering of stamp duty thresholds has seen many buyers forge ahead with purchases that they might otherwise have held out on, and house prices could bloat as a result.
“While prospective buyers will need to take care that they do not end up paying over the odds for a home, particularly given they will now be cutting it very fine to get a sale across the line before the change comes in, it is understandable that they would wish to mitigate the tax bills.
“The Government’s decision not to extend the increase to the stamp duty threshold will pile even more pressure on prospective first-time buyers in particular. Those who have been scrimping and saving to build an adequate deposit will soon find themselves facing a hefty tax bill of up to £5,000, eroding affordability further and making homeownership all the more expensive.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, saud: “We have noticed in our offices a rush of first-time buyers in particular, trying to take advantage of lower stamp duty rates, which has skewed some parts of the market.
“Now it is almost too late to benefit from the concession, we are seeing prices settle and more balance between supply and demand. However, a shortage of houses, not flats, in some price ranges remains, which is continuing to drive interest and helping to maintain activity.”
Nathan Emerson, chief executive of Propertymark, added: “Year-on-year it is positive to see progression within the housing market, and it is encouraging to see momentum continue as we head further into 2025. There are still aspects to be mindful of, however, such as how inflation could influence future base rate decisions and what effect on affordably that could have.
“With inflation now sitting at 3%, which is above the Bank of England’s initially targeted level, we could see it becoming potentially more challenging for people to approach the buying and selling process should this translate into higher interest rates as a result.”
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