Experts predict market shifts as stamp duty thresholds are set to change in April.
Topics covered
Current state of the UK housing market
The UK housing market has shown remarkable resilience, with average house prices increasing for the sixth consecutive month. According to the Nationwide Building Society, property values rose by 0.4% month-on-month in February, bringing the average house price to £270,493.
This growth reflects an annual increase of 3.9%, indicating a robust market despite ongoing affordability challenges.
Factors driving market activity
Robert Gardner, Nationwide’s chief economist, highlighted the significant uptick in housing transactions, particularly in the latter half of 2024, where activity surged by 14% compared to the same period in 2023.
This increase can be attributed to a rise in the number of homes available for sale, providing buyers with greater choice and negotiating power. Iain McKenzie, CEO of the Guild of Property Professionals, noted that the influx of new buyers has further stimulated market activity, suggesting a healthy demand for properties.
Impending stamp duty changes
However, the landscape may shift as upcoming changes to stamp duty are set to take effect in April. The “nil rate” threshold for first-time buyers will decrease from £425,000 to £300,000 in England and Northern Ireland. This adjustment is expected to prompt a surge in property sales in March as buyers rush to finalize transactions before the new rates apply. Mortgage expert Karen Noye from Quilter warned that the anticipated increase in tax bills could inflate house prices as buyers scramble to secure homes before the deadline.
Market predictions and buyer behavior
As the deadline approaches, many prospective buyers are weighing the potential financial implications of the stamp duty changes. Jeremy Leaf, an estate agent in North London, observed a notable increase in first-time buyers attempting to capitalize on the current lower rates. However, he cautioned that as the deadline nears, the market is beginning to stabilize, with prices settling and a more balanced supply-demand dynamic emerging.
Verona Frankish, CEO of Yopa, noted that most buyers are factoring in the potential increase in stamp duty costs when making offers. Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners, emphasized the urgency for buyers to act swiftly, as missing the stamp duty deadline could result in significantly higher tax bills, potentially derailing their home purchase plans.
In summary, while the UK housing market continues to thrive, the impending stamp duty changes may introduce new challenges and opportunities for buyers and sellers alike. As the market adapts to these shifts, stakeholders must remain vigilant and informed to navigate the evolving landscape effectively.
