Slowing house price growth across the UK post-stamp duty rush prompts queries on property purchasing opportunities.
Slowed House Price Growth Indicates Shift in Property Market Trends
Recent data from the Nationwide House Price Index reveals a deceleration in annual house price growth to 3.4% in April, down from 3.9% in March. Monthly growth also showed a decline of 0.6%, resulting in an average UK house price of £270,752.
Following a surge at the beginning of the year due to a rush to close deals before stamp duty thresholds dropped, the market has experienced a slowdown. Stamp duty relief for first-time buyers dropped from £425,000 to £300,000, and from £250,000 to £125,000 for home movers, thus raising buying costs.
According to HMRC estimates released today, there were 177,370 property sales registered with the taxman in March, representing a yearly increase of 104%. Some analysts are now speculating whether the market might be headed for a slower period as buyers adapt to increased stamp duty costs.
Robert Gardner, Nationwide's chief economist, stated, "The softening in house price growth was to be expected, given the changes to stamp duty at the start of the month. Early indications suggest there was a significant jump in transactions in March, with buyers bringing forward their purchases to avoid additional tax obligations."
However, the end of the stamp duty holiday also coincides with the traditional spring and summer home selling season, which typically sees longer days and increased viewings. Additionally, the prospect of further interest rate cuts could further boost buyer demand.
Gardner added, "Activity is likely to pick up steadily as summer progresses, despite wider economic uncertainties in the global economy, since underlying conditions for potential home buyers in the UK remain supportive. Unemployment remains low, earnings are rising at a healthy pace in real terms, household balance sheets are strong, and borrowing costs are likely to moderate a little if the bank rate is lowered further in the coming quarters as we and most other analysts expect."
Despite the recent slowdown, the housing market appears to be fragile, with affordability remaining a concern. The latest Zoopla House Price Index reported an annual rise in demand of just 1%, while supply increased by 12%. However, the potential for interest rate cuts next week might change this trend.
Jonathan Handford, managing director at Fine & Country, commented, "There is growing speculation that cuts could come as soon as May. That outlook is being shaped not only by domestic inflation data but also by global headwinds - including the potential disruption caused by changes to global trade. However, this could also prompt UK policymakers to act faster to support growth and ease lending conditions."
These challenges notwithstanding, the market is expected to regain momentum later this year, provided affordability barriers are addressed. According to industry experts, house prices are anticipated to slow further to 1-1.5% over the coming months before showing a recovery. Predictions for the end of the year range from 2.5% growth (Knight Frank) to 4% (Savills).
The regional disparity persists, with stronger price growth in northern regions, such as the North West, North East, Scotland, and Yorkshire and the Humber (around 5%), compared to slower growth in southern and prime London markets.
- Investing in property might face a potential slow period as buyers adjust to increased stamp duty costs, according to some analysts, following the end of the stamp duty holiday and the surge in property sales at the start of the year.
- The housing market, despite the recent house price slowdown, remains a concern for personal finance due to affordability, with the annual rise in demand being merely 1%, whereas supply increased by 12%, according to the latest Zoopla House Price Index.
- The prospect of further interest rate cuts could potentially boost buyer demand and help the housing market regain momentum later this year, as suggested by Nationwide's chief economist, Robert Gardner.
- The regional disparity in property market trends continues, with stronger price growth in northern regions and a slower growth in southern and prime London markets, indicating a shift in the larger real-estate landscape.
