The housing market has had a busy start to the year as buyers raced to beat changes to stamp duty thresholds at the end of March, but the outlook is uncertain now that property purchase costs are higher. Households could also be hit by Trump's trade tariffs.
The latest house price index data paints a mixed picture.
Official figures from HM Land Registry, published on 16 April, show house prices rose by 5.4% annually in February, up from 4.8% in January. This takes the average UK property to £268,000, around £13,000 higher than a year ago.
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Property site Rightmove also paints a resilient picture. It reported that asking prices increased by 1.4% in the first few weeks of April – a larger-than-usual increase for this time of year.
This contradicts what other sources have been reporting. The latest data from Halifax and Nationwide points to a slowdown.
Halifax says house prices rose by 2.8% on an annual basis in March, marking no change compared to February’s growth rate. On a monthly basis, prices fell by 0.5%. Nationwide also reported no change in the annual figure between February and March (3.8%).
What's causing the difference?
HM Land Registry’s figures are published with a two-month time lag, which could help explain things. The data could soften as it gets closer to the 31 March stamp duty deadline.
Meanwhile, Rightmove's data is based on asking prices rather than prices at the mortgage-approval stage (when Halifax and Nationwide take their readings). Not every seller will be able to achieve the asking price they set.
Will stamp duty changes put the brakes on the housing market?
In recent months, experts have been warning of a potential slowdown in the property market after stamp duty thresholds dropped on 31 March.
First-time buyers now begin paying the controversial property tax on homes worth more than £300,000, down from £425,000 previously. Meanwhile, home movers have seen the tax-free threshold drop from £250,000 to £125,000.
“The market is likely to remain a little soft in the coming months since activity will have been brought forward to avoid the additional tax obligations – a pattern typically observed in the wake of the end of stamp duty holidays,” said Nationwide’s chief economist Robert Gardner.
Despite this, he expects activity to pick up as we progress through the summer.
What's happening with sold house prices?
Sold house prices are the most accurate indication of what is happening in the UK property market. The official figures published by HM Land Registry are the most authoritative source, however they come with a two-month time lag.
The 5.4% increase in the year to February, published in HM Land Registry’s latest report, is up from 4.8% in January. Prices held firm on a monthly basis, with growth coming in at 0%.
“This suggests a housing market that continues to defy expectations,” said Karen Noye, mortgage expert at wealth manager Quilter.
That said, the time lag associated with this index means you might need to consider it alongside other sources to get an indication of current market conditions – particularly in light of the stamp duty changes that took place at the end of March.
Major lenders like Halifax and Nationwide publish house price data with a shorter time lag, but this is based on the lender’s valuation at the mortgage-approval stage. This can differ from the actual sale price, but the idea is that it is near enough to the end of the home-selling process to offer a more realistic snapshot than initial asking prices.
Property website Zoopla also publishes a house price index, which uses sold prices, mortgage valuations and data for agreed sales. We look at which house price index is best in further detail in a separate article.
House price index | Report date | Monthly change | Annual change | Average UK house price |
Figures shown cover February. March’s report is not yet available. | +0% | +5.4% | £268,319 | |
Figures shown cover March. | +0% | +3.9% | £271,316 | |
Figures shown cover March. | -0.5% | +2.8% | £296,699 | |
Figures shown cover February. | Largely unchanged month-on-month | +1.8% | £267,500 |
Regional house price variations
There are of course big regional variations, but using the "house prices in your area" report from the Office for National Statistics can help you understand how prices have changed in your borough or local authority area.
The latest report from HM Land Registry suggests prices are growing at the fastest rate in Northern Ireland (9% annually), followed by Scotland (5.7%), England (5.3%) and Wales (4.1%). Of the English regions, the North West is seeing the fastest growth (8%).
Meanwhile, London saw the lowest level of growth at 1.7%. Prices in London are particularly high, with the average house now costing almost £556,000. This suggests affordability limits have become stretched.
Affordability is stretched in London, meaning house prices are rising more slowly in the capital than elsewhere. Stamp duty changes are also likely to have the biggest impact in London and the South East.
Different property types are also seeing significant variations in price. Data from Zoopla shows the gap between the value of the average house and the average flat widened to a 30-year high earlier this year. As of January, a typical house was 67% more expensive than a flat.
“The search for space over the pandemic boosted demand for houses, while concerns over the running costs of flats, such as service charges and ground rents, has acted as a drag on flat prices. Building safety is another factor impacting demand for some recently-built flats,” explained Richard Donnell, executive director of research at Zoopla.
Are property asking prices going up?
Asking prices are a useful barometer for market sentiment as it currently stands. These snapshots tend to be published only a few weeks after the data was recorded. The drawback is that asking prices don’t necessarily reflect the final sold price.
Rightmove data shows that asking prices increased by 1.4% on a monthly basis in the first few weeks of April. This is a larger-than-usual increase for this time of year, taking the average price to a record £377,182. On an annual basis, prices were up 1.3%.
“We’ve seen our first price record in nearly a year, despite the number of homes for sale being at a decade high,” said Colleen Babcock, property expert at Rightmove. Typically, you would expect an increase in housing supply to keep prices suppressed thanks to the laws of supply and demand. This hasn’t been the case this time around.
Despite this, sellers should still be careful when deciding on an asking price. Not everyone will be able to achieve the asking price they set – and some sellers may have to adjust their expectations as buyers manage the additional costs associated with a higher stamp duty bill.
Will house prices rise in 2025?
Zoopla is expecting house price growth to slow going forward, in part due to more properties coming onto the market between March and May.
“There are several factors behind the expected slowdown. The number of homes for sale is growing faster than the number of sales being agreed, boosting choice for buyers and re-enforcing a buyers’ market,” said Donnell.
Despite this, most experts believe house prices will end 2025 in positive territory. Real estate consultancy Knight Frank has forecast 2.5% growth, while estate agent Savills has predicted 4%. It is worth pointing out that these predictions were made before US president Donald Trump announced aggressive trade tariffs, stoking fears of a recession.
Naturally, there will be regional variations in the property market, with prices forecast to rise more rapidly in the north than the south. Prices are expected to increase by 5% in the North West, the North East, Scotland, and Yorkshire and the Humber, according to Savills. Prices in the East of England and the South West are forecast to increase by 2.5%.
Will Trump’s tariffs impact house prices?
Some of the worst tariffs announced by Trump on 2 April have now been paused, but global growth is still expected to take a knock. Most countries have been slapped with a baseline tax of 10%, while China has been hit with an effective tariff rate of 145% across most goods.
The uncertainty has stocked fears of a recession, which could hit homebuyer demand. The silver lining is that tariffs could force the Bank of England to cut interest rates more quickly, which could bring mortgage rates down.
Marc von Grundherr, director of Benham and Reeves, remains optimistic. “The property market remains fighting fit despite the wider economic turbulence faced on numerous fronts, not least from Trump and his tariff war, and whilst we may see the odd monthly adjustment, the real proof in the pudding is a robust level of annual growth.
“So whilst homeowners could find that the cost of some imported US items might rise should the UK government take a tit-for-tat approach towards Trump, it could result in a swifter reduction in mortgage rates if inflation remains stubbornly persistent and the Bank of England moves to curb it with a hastened schedule of interest rate cuts.”
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