UK house prices dip in February with end to stamp duty holiday, Halifax says

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UK home costs unexpectedly dipped in February, as an uptick in property gross sales pushed by a stamp responsibility vacation got here to an finish, based on mortgage lender Halifax.

In February, the typical UK home value fell 0.1 per cent from January to £298,602, Halifax stated. On an annual foundation, the typical value rose at a price of two.9 per cent, the identical price as January.

The worth modifications have been under forecasts. Economists polled by Reuters had forecast 0.3 per cent month on month progress and a 3.1 per cent annual rise.

Amanda Bryden, head of mortgages at Halifax, stated the figures demonstrated a “delicate steadiness” within the UK home market.

“Whereas there’s been speak of a final minute rush on new mortgages forward of the modifications to stamp responsibility, inevitably we’ve seen among the demand that was introduced ahead begin to fade because the April deadline ticks nearer, given the time wanted to finish a purchase order,” she stated.

The present stamp responsibility vacation was introduced in September 2022 when mortgage charges have been quickly rising, and stays in place till March 31.

From April, first-time patrons, for instance, will begin paying the levy on purchases of £300,000 or extra, slightly than £425,000 at current.

Friday’s figures distinction with information final week from mortgage lender Nationwide, that indicated that the typical home value rose greater than anticipated in February, by a month-to-month price of 0.4 per cent.

Halifax has a bigger pattern than Nationwide, with about 15,000 transactions in contrast with 12,000, and a give attention to northern areas that may generate short-term variations.

Nonetheless, each Nationwide and Halifax confirmed that home costs surged throughout the pandemic, contracted as mortgage charges rose over the previous two years, and recovered in 2024.

Ashley Webb, economist on the consultancy Capital Economics, stated that the dip in home costs proven by Halifax instructed that rising mortgage charges, coupled with weak point within the economic system as a complete, “is weighing on housing demand and costs a bit greater than we beforehand thought”.

He added that the worsening outlook within the jobs market — which some economists and companies say has been hit by the Labour authorities’s improve of nationwide insurance coverage contributions by employers — “might imply home value progress softens additional over the approaching months”.

Mortgage charges have been unstable over the previous yr, reflecting altering investor expectations of how a lot the Financial institution of England will reduce borrowing prices this yr. Regardless of an uptick in latest months, mortgage charges stay under their peak reached in the summertime of 2023.

Halifax reported that home costs in Northern Eire continued to rise on the quickest annual tempo within the UK, up 5.9 per cent to a median of £205,784.

London remained the most costly property market with a median property value of £545,183, however with the slowest annual improve at 1.6 per cent.  

Affordability continues to be stretched, stated Bryden. However she added that the “scarcity of housing provide coupled with sustained demand suggests property costs will proceed to rise this yr, albeit at a extra measured tempo in comparison with final yr”.