UK home costs recorded their sharpest month-to-month fall in a 12 months because the housing market cooled following a rush of consumers attempting to beat modifications to stamp obligation thresholds in England and Northern Eire.
In line with Halifax, the typical value of a house fell by 0.5% in March to £296,699 – marking the most important month-to-month drop since March 2023. This was the second consecutive decline, with February’s determine revised down from a 0.1% dip to a 0.2% fall.
The pullback follows a mini-boom in January, when property costs surged to a file excessive as consumers scrambled to finish transactions earlier than modifications to stamp obligation got here into impact on 1 April.
“House prices rose in January as buyers rushed to beat the March stamp duty deadline,” stated Amanda Bryden, head of mortgages at Halifax. “However, with those deals now completing, demand is returning to normal and new applications are slowing.”
The modifications, launched by Chancellor Rachel Reeves in her October price range, ended the momentary stamp obligation cuts launched in England and Northern Eire through the pandemic. First-time consumers now pay stamp obligation on properties value greater than £300,000, down from £425,000, whereas the higher threshold for a decreased charge has fallen from £625,000 to £500,000. The usual zero-rate threshold for all consumers has additionally been halved, from £250,000 to £125,000.
Halifax reported a big spike in completions in March, with the amount of home gross sales exceeding these in January and February mixed. “It included the busiest single day on record,” stated Bryden. “Following this burst of activity, house prices, which remain near record highs, unsurprisingly fell back last month.”
Regardless of the slowdown, analysts stay cautiously optimistic in regards to the outlook for the housing market in 2025. A continued imbalance between provide and demand is predicted to assist costs, and falling mortgage charges may convey additional stability.
The Financial institution of England is broadly anticipated to chop the bottom rate of interest as much as three extra instances this 12 months, every by 0.25 share factors – a transfer that would offer further reduction for consumers and assist affordability.
“Hopefully this month-on-month dip is only temporary,” stated Nathan Emerson, chief government of Propertymark. “The spring and summer months normally spur on a flurry of housing activity, especially at a time when there are many competitive mortgage deals out there as a result of last year’s rate reductions.”
Mortgage charges have edged down once more, with Moneyfacts reporting the typical two-year mounted deal now at 5.32%, and the five-year mounted charge at 5.17%. In the meantime, the variety of residential mortgage merchandise continues to rise, hitting 6,945 – up barely from 6,936 on the finish of final week.
Regardless of this, Halifax’s information signifies a broader softening in market momentum. Annual home value progress stood at 2.8% in March – unchanged from February, however down from 3.4% in December and 4.7% in November.
Whereas the most recent information suggests the market is rebalancing after a unstable begin to the 12 months, all eyes will probably be on how consumers and sellers reply to altering financial situations over the approaching months.
