Nationwide: UK house price growth flattens in March – will the housing market spring into action?

House price growth was flat in March as property market activity appears to have slowed down in the build up to stamp duty changes.

The latest Nationwide House Price Index shows average property values were up by 3.9% annually in March to £271,316.

The figure is unchanged since February and suggests house prices stalled as buyers prepared for higher stamp duty costs.

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From today (1 April), the stamp duty threshold for first-time buyers has dropped from £425,000 to £300,000, while home-movers will pay the tax from £125,000 instead of £250,000.

The race to beat the deadline has been driving the market in recent months and now activity appears to have slowed down.

Robert Gardner, chief economist for Nationwide, said: “These price trends are unsurprising, given the end of the stamp duty holiday at the end of March.

“Indeed, 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.”

It comes as the spring months are usually one of the best times to sell a property as the days are longer and can attract more viewings.

The spring property market

There are regional differences that skew the average house price figures.

In Northern Ireland, annual price growth rose 13.5% during the first quarter, while average prices were up 3.6% and 3.9% in Wales and Scotland during March.

Across England overall, prices were up 3.3% year-on-year.

Average prices in northern England – comprising North, North West, Yorkshire & The Humber, East Midlands and West Midlands – were up 4.9% annually.

This outperformed southern England, which saw a more modest 2.5% year-on-year rise.

The Outer South East was the best performing southern region with annual price growth of 3.0%. Meanwhile, London was the weakest performing region in the UK as a whole, with annual growth of 1.9%.

Nationwide’s data shows semi-detached houses have seen the biggest percentage rise in prices over the last 12 months, with average values up 4.8% year on year.

In contrast flats saw a slowing in annual price growth compared with last quarter, with a 2.3% rise. Detached properties recorded a 4.5% annual increase, while terraced properties saw a 4.1% year-on-year rise.

Is now a good time to buy a property?

Lower stamp duty thresholds mean it will now cost more to buy a property.

But homebuyers could be boosted by lower mortgage rates, especially if the base rate falls further.

Additionally, the busy spring home selling season could mean house prices dip or moderate due to higher levels of supply, taking some of the sting out of higher stamp duty costs.

Gardner is confident that the market will improve, adding: “Activity is likely to pick up steadily as the summer progresses, despite wider economic uncertainties in the global economy, since underlying conditions for potential home buyers in the UK remain supportive.

“The unemployment rate is low, earnings are rising at a healthy pace in real terms (i.e. after accounting for inflation), household balance sheets are strong and borrowing costs are likely to moderate a little if interest rates are lowered further in the coming quarters as we and most other analysts expect.”

Tom Bill, head of UK residential research at Knight Frank, said house prices were supported by the stamp duty deadline in the first quarter of the year, adding: “We expect a dip in activity as demand effectively resets from April.

“Buyers coming back into the market with a re-levelled playing field will find that supply is strong, which should keep downwards pressure on prices. Activity should recover by the summer but borrowing costs could be held higher for longer by erratic US trade policy and the inflationary impact of measures like the employer national insurance changes.”

Matt Thompson, head of sales at estate agent Chestertons, added: “Despite the rush of first-time buyers entering the market to beat the stamp duty deadline having slowed down, sellers anticipate a busy spring market.

"We have seen an increasing number of homeowners listing their property for sale in March which is currently creating a greater choice for house hunters. Still, with London having one of the most competitive property markets in the world, buyers are required to act fast and start their search as early as possible.”