The rush to beat the changes in stamp duty thresholds appears to have pushed up house prices at the start of the year but more recent data suggests a slowdown could be on its way in time for the busy spring selling season.
Stamp duty thresholds are set to drop at the end of March, pushing up the cost of buying a home.
Hopes of an extension for homebuyers currently going through the conveyancing process were dashed during yesterday’s Spring Statement, with no mention of stamp duty.
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Official data suggests there has been a rush to get deals done.
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The latest House Price Index from the Office for National Statistics (ONS) and Land Registry shows average UK house prices rose 4.9% annually in January, up from 4.6% in December.
This put the average price of a UK property at £268,548 – £13,000 higher than 12 months ago.
The figure was also up 0.2% on a monthly basis.
The data is based on cash and mortgaged property sales recorded with the Land Registry but there can be a time lag.
More recent data from Zoopla, based on February sales, paints a different picture.
It shows the annual rate of UK house price growth dipped to 1.8% in February, down from 1.9% in January.
The housing market is now expected to see a flurry of supply as demand may drop due to higher costs, plus the spring is a typically popular time to list a property.
The stamp duty rush
A race to beat the stamp duty deadline has driven the property market in recent months.
From April, stamp duty relief for first-time buyers drops from £425,000 to £300,000 and falls from £250,000 to £125,000 for home movers.
This has created a rush of transactions and has helped push up house prices.
ONS data shows annual house price inflation was highest in the North East of England during January, where prices increased by 9.1%. London was the English region with the lowest annual inflation, where prices increased by 2.3% annually.
Jeremy Leaf, a north London estate agent, said: "The modest increase in house prices confirms what we have seen in our offices – a steady rise kept in check by improving stock levels.
“However, these figures reflect activity from a few months ago at least when many were trying to take advantage of the fast-disappearing stamp duty concession which skewed performance. Looking forward, some will inevitably fail to make the cut but February's fall in the rate of inflation and wages still growing solidly will mean hard negotiations which are more likely to proceed than fail.”
Will house prices rise in 2025?
The housing market is set to enter its busy spring selling period when the longer days make it more attractive to come and view properties.
But property website Zoopla is anticipating that house price growth may start to slow now as homebuyers adjust to higher property taxes.
Zoopla said the number of homes for sale are up 11% year-on-year, with further increases expected as almost 30% of listings typically launch between March and May.
Demand is slightly behind, up 10%, which could bring prices down.
Zoopla said demand is particularly lower in London compared with the rest of the country, where eight in 10 will now pay stamp duty.
Richard Donnell, Executive Director at Zoopla, provides an outlook on the market: “We expect the growth in sales agreed to continue rising at a steady pace over 2025 as more sellers, most of whom are also buyers, enter the market in the coming months. House price growth is set to moderate further as supply grows and the extra costs of stamp duty in England feed through into house prices.
“A slowing in house price growth is not a major concern although the market needs some growth in prices to encourage sellers to come to market and buyers to make realistic offers on homes for sale.
“There is plenty of demand for homes but also lots of choice. Households looking to sell their home in 2025 need to be careful when setting their asking prices if they are to attract sufficient demand to agree a sale. It’s important to seek the advice of local estate agents to inform the most suitable pricing strategy for every home.”
Tom Bill, head of UK residential research at Knight Frank, agrees that house price inflation has been falling since the start of the year as supply outweighs demand.
He said: “Buyer appetite has been steady but we expect it to strengthen from next month as new rates of stamp duty create a level playing field for all buyers.
“That said, doubt remains over how quickly mortgage rates will fall, particularly if the Spring Statement isn’t well-received by financial markets and inflation stays stubbornly high. We also face months of uncertainty over how US trade tariffs may make life more difficult for UK borrowers. House prices should continue to rise faster in relatively more affordable parts of the country.”
Toby Leek, president of estate agent trade body NAEA Propertymark, added: “It’s inevitable that the changes in stamp duty thresholds were going to push many buyers to enter the market, in some cases, quicker than they potentially would have liked.
“By doing this and by acting quickly on their next home, lots of people may have saved thousands in the process. However, we’re now likely to witness the return to normality on the tail end of this spike as the sense of urgency has gone for a lot of buyers.
“Moving forward, we are now possibly going to see a further tapered slowing in house price growth, especially in areas like London, as a new middle ground to entice buyers starts to emerge.”
