The average UK house price has increased month-on-month for the sixth month in a row, but looming stamp duty changes could dampen the market, according to an index. Property values rose by 0.4% month-on-month in February, taking the average house price to £270,493, Nationwide Building Society said.
House prices increased by 3.9% annually. Robert Gardner, Nationwide’s chief economist, said: “House prices increased by 0.4% month-on-month, after taking account of seasonal effects – the sixth consecutive monthly gain. “Housing market activity has also remained resilient in recent months, despite ongoing affordability challenges. Indeed, the second half of 2024 saw a noticeable pick up in total housing transactions, which were up 14% compared with the same period in 2023.”.
Iain McKenzie, chief executive of the Guild of Property Professionals, said: “A rise in the number of homes for sale has provided buyers with more choice and negotiating power, while the influx of new buyers has further driven market activity.”. Nathan Emerson, chief executive of property professionals’ body Propertymark, said: “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.”.
Stamp duty discounts are set to become less generous in April, with the “nil rate” threshold for first-time buyers reducing from £425,000 to £300,000. Stamp duty applies in England and Northern Ireland. Nationwide’s report predicted the stamp duty changes could see sales jump in March, followed by a period of weakness in the following months.
Karen Noye, a mortgage expert at Quilter, said: “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.”.
Jeremy Leaf, a north London estate agent said: “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.”.
Yopa chief executive Verona Frankish said: “We’ve seen the vast majority of buyers take the potential stamp duty cost increase into consideration before submitting their offers.”. Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “Buyers that miss the (stamp duty) deadline face being stung with a much higher tax bill than they budgeted for. This could add thousands to a home move and force some to abandon their purchase altogether.”.
Nationwide cut some of its mortgage rates to as low as 3.99% on Friday. It reduced rates by up to 0.25 percentage points across selected two, three and five-year fixed-rate mortgages. Matt Thompson, head of sales at London-based estate agent Chestertons, said: “With the news of sub-4% mortgages returning to the market, we expect more house hunters to start their search over the coming weeks.”.
Tom Bill, head of UK residential research at Knight Frank, said: “We expect low single-digit house price growth this year that will hopefully surpass the rate of CPI (Consumer Prices Index) inflation.”. Jonathan Handford, managing director at estate agent group Fine & Country, said: “With a heated market, looming tax changes, and economic uncertainty, the coming months will be crucial. If borrowing costs remain favourable and inflation stabilises, buyer confidence could hold steady – but if affordability worsens, the housing market may face fresh challenges as 2025 unfolds.”.
