The UK housing market experienced a period of relative stability in February, with house prices remaining broadly unchanged. According to Halifax, the average house price dipped by a marginal 0.1% month-on-month, settling at £298,602. This followed January’s figure of £298,815, indicating a consistent annual growth trend.
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Amanda Bryden, head of mortgages at Halifax, attributed this stabilization to a delicate balance of market forces. While a surge in mortgage applications was observed ahead of upcoming stamp duty changes, this demand has begun to taper off as the April deadline approaches. The time required to complete a purchase has likely contributed to this slowdown.
Regional Variations in House Price Growth
February’s data reveals a widespread deceleration in house price inflation across most UK regions. London, typically a hotbed of property market activity, experienced a significant easing in annual growth, dropping from 2.6% in January to 1.6% in February. Despite this slowdown, London retains the highest average property price in the UK, standing at £545,183.
Scotland presented a contrasting picture, with annual house price growth accelerating to 3.8% in February, up from 2.5% in January. The average house price in Scotland now stands at £213,014. Northern Ireland maintained its position as the region with the strongest annual property price growth, remaining largely unchanged at 5.9% in February, with an average property price of £205,784.
Wales saw a 2.8% annual increase in house prices, reaching an average of £226,811. Meanwhile, Yorkshire and Humberside in England recorded the most robust annual property price growth since July 2021, at 4.1%, with average property prices now at £216,130.
First-Time Buyers vs. Home Movers
Bryden highlighted a divergence in price trends between first-time buyers and home movers. Growth in first-time buyer property prices moderated to 2.4% in February, while home mover price inflation accelerated to 3.7%. This suggests differing market dynamics influencing these two buyer segments.
Anticipating the Impact of Stamp Duty Changes
Looking ahead, the upcoming changes to stamp duty, set to take effect in April, are anticipated to trigger a short-term surge in transactions. Buyers are likely to try and finalize purchases before the deadline to avoid the increased tax burden.
Stephanie Daley, director of partnerships at mortgage advisor Alexander Hall, believes that while the stamp duty deadline has fueled market activity, many buyers have already factored in the potential cost increase. This suggests that any market correction following the April 1st deadline will likely be minimal.
Conclusion: A Resilient Market Outlook
Despite fluctuations and regional variations, the UK housing market demonstrates resilience. The anticipated impact of stamp duty changes is expected to be short-lived, with experts predicting continued market strength throughout the summer selling season. Further interest rate reductions could potentially bolster buyer sentiment and contribute to sustained market growth in the coming months. The interplay of these factors will continue to shape the UK housing market landscape in the near future.
