The housing market appears to have slowed down in February as demand to beat the Stamp Duty deadline faded.
Halifax’s latest House Price Index for February shows average property prices dipped 0.1% on a monthly basis and rose 2.9% annually – the same rate as in January to £298,602.
Most areas of the UK saw a slowdown in house price inflation during February, Halifax said.
Bucking the trend was Scotland, which recorded annual growth of 3.8% compared with 2.5% in January, with an average house price of £213,014.
Northern Ireland continues to have the strongest annual property annual price growth in the UK, largely unchanged at 5.9% in February. Properties in Northern Ireland now cost an average of £205,784, Halifax said.
House prices in Wales were up 2.8% compared with the previous year, with properties valued at an average of £226,811.
In England, Yorkshire and Humberside recorded the strongest annual property price growth for the first time since July 2021, up 4.1% compared with the previous year, with properties now costing an average £216,130.
London saw annual house price growth ease from 2.6% in January to 1.6% in February. The capital still has by far the most expensive average property price in the UK, at £545,183, according to the index.
Amanda Bryden, head of mortgages for Halifax, said: “February’s figures highlight the delicate balance within the UK housing market. While there’s been talk of a last minute rush on new mortgages ahead of the changes to stamp duty, inevitably we’ve seen some of the demand that was brought forward start to fade as the April deadline ticks closer, given the time needed to complete a purchase.
“That may help to explain why growth in first-time buyer property prices eased in February, falling to 2.4%, in contrast to home-mover price inflation which accelerated, reaching 3.7%
“While house price growth has slowed overall, market activity remains strong and comparable to pre-pandemic levels, demonstrating a resilience amongst buyers that’s been evident in the face of higher borrowing costs.
“While those affordability challenges persist, the ongoing shortage of housing supply coupled with sustained demand suggests property prices will continue to rise this year, albeit at a more measured pace compared to last year.”
Commenting on the data, Jason Tebb, president of OnTheMarket, said: “The housing market continues to shake off external economic concerns demonstrating remarkable resilience, with encouraging levels of activity and interest.
“The steadiness of house prices suggests that affordability is keeping a lid on values with buyers unable and unwilling to pay inflated amounts. Sellers keen to take advantage of what is traditionally a busier time of year for the housing market as the sun shines, should bear this in mind and seek advice from an experienced local agent.
“Higher interest rates have dampened activity so last month’s rate cut from the Bank of England will be helpful in giving the market a boost. As we approach the end of the stamp duty concession this month, further cuts could give the market some much-needed impetus later in the year.”
Tom Bill, head of UK residential research at Knight Frank, added: “Despite a rush to complete ahead of the Stamp Duty increase in April, supply outpaced demand in the first two months of this year, which kept downwards pressure on house prices.
“That pressure will be sustained if more inflation creeps into the UK economy through measures such as raising employer national insurance contributions. We were also reminded this week of how global politics can act as a brake on the market when Germany announced a defence spending increase, which pushed up borrowing costs in Europe. We expect low single-digit house price growth this year but the outlook is changeable.”
Iain McKenzie, chief executive of The Guild of Property Professionals, added: “The market remains active, driven by first-time buyers rushing to complete deals ahead of stamp duty changes and needs-based buyers who postponed decisions during 2024’s volatility. Strong earnings growth is also supporting activity. However, a greater supply of homes for sale and the impending Stamp Duty deadline are expected to keep price inflation in check.”
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