30 April 2025
If you are covering the latest Nationwide House Price Index, please see the following comment from Holly Tomlinson, financial planner at Quilter:
House prices edged down by 0.6% in April, according to the latest Nationwide House Price Index, bringing annual growth to 3.4%.
The figures point to a market that remains finely balanced. Ongoing affordability pressures and recent tax changes are clearly influencing buyer behaviour negatively. Mortgage rates, though slightly below their 2023 peaks, remain elevated, with the average two-year fixed rate hovering around 5%. Higher borrowing costs continue to keep monthly repayments high and limit the purchasing power of many would-be buyers.
At the same time, a shortage of properties for sale should see off any significant drops. Many homeowners, reluctant to give up cheaper historic mortgage deals, are choosing to stay put, reducing market turnover and keeping supply tight.
Adding to the financial pressure on buyers are the recent changes to Stamp Duty Land Tax, which took effect at the start of April. The nil-rate band for all buyers has been reduced from £250,000 to £125,000, while for first-time buyers, the threshold has fallen from £425,000 to £300,000. The maximum property value eligible for first-time buyer relief has also dropped from £625,000 to £500,000.
These changes have increased upfront costs, particularly for those purchasing in higher-value areas. For example, a first-time buyer purchasing a £500,000 property now faces a stamp duty bill of £10,000, compared with £3,750 under the previous regime. This shift in taxation has added a further affordability hurdle at a time when many buyers are already stretched.
There was a notable surge in transaction activity earlier in the year as buyers rushed to beat the stamp duty changes, but with that deadline now passed, market momentum has cooled once again leading to today’s drop in prices.
Overall, today’s figures suggest a market that is fragile. Any meaningful pick-up in activity is likely to depend on a more material fall in mortgage rates or an improvement in real incomes. Until then, the housing market looks set to continue treading water.
