Stamp duty change pulls forward demand, cooling housing activity this month
Annual house price growth in the UK eased to 3.4% in April, down from 3.9% in March, according to the latest Nationwide House Price Index. On a monthly basis, prices declined by 0.6% after seasonal adjustment.
Nationwide attributed the dip in growth to recent changes in stamp duty, which appear to have accelerated buyer activity into March.
The average house price is now £270,752, down from last month’s £271,316.
“The softening in house price growth was to be expected, given the changes to stamp duty at the start of the month,” said Robert Gardner (pictured left), chief economist at Nationwide Building Society. “Early indications suggest there was a significant jump in transactions in March, with buyers bringing forward their purchases to avoid additional tax obligations.
“The market is likely to remain a little soft in the coming months, following the pattern typically observed following the end of stamp duty holidays. Nevertheless, 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.”
Gardner added that low unemployment, rising real incomes, and strong household finances could help stabilise demand.
“Borrowing costs are likely to moderate a little if bank rate is lowered further in the coming quarters as we and most other analysts expect,” the economist said. “Indeed, swap rates – which underpin fixed rate mortgage pricing – have moderated in recent weeks.”
Nathan Emerson (pictured centre), chief executive of trade body Propertymark, found it encouraging to see house prices remain resilient month on month despite economic uncertainty globally.
“This provides many aspiring home movers with a perfect opportunity to investigate the marketplace more robustly and potentially better negotiate their next steps on the property ladder,” he said.
Jonathan Samuels (pictured right), chief executive of specialist property lender Octane Capital, believes improvements to the mortgage market and the lower rates being offered by lenders have helped to drive market confidence in recent months.
“Of course, mortgage rates still remain higher than many buyers have become accustomed to in previous years, and this has resulted in a more measured market performance where house price growth is concerned,” he said.
“However, we’ve seen monthly mortgage approval numbers sit above the 60,000 threshold since January of last year, which demonstrates buyer confidence in the market and bodes very well for the year ahead.”
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