28 February 2025
If you are covering the latest Nationwide house price index, please see the following comment from Karen Noye, mortgage expert at Quilter:
“House price growth picked up the pace a little in February, with the average house price rising 0.4% on a month on month basis, following only modest growth of 0.1% in January. However, the annual rate of house price growth dropped slightly, rising 3.9% in February compared to 4.1% in January.
“With the upcoming changes to stamp duty in April, we could see this monthly uptick continue. The sharp rise in tax bills expected due to the lowering of stamp duty thresholds has seen many buyers forge ahead with purchases that they might otherwise have held out on, and house prices could bloat as a result. While prospective buyers will need to take care that they do not end up paying over the odds for a home, particularly given they will now be cutting it very fine to get a sale across the line before the change comes in, it is understandable that they would wish to mitigate the tax bills.
“The government’s decision not to extend the increase to the stamp duty threshold will pile even more pressure on prospective first-time buyers in particular. Those who have been scrimping and saving to build an adequate deposit will soon find themselves facing a hefty tax bill of up to £5,000, eroding affordability further and making homeownership all the more expensive.
“On a slightly more positive note, the Bank of England’s recent interest rate cut has seen lenders trim mortgage rates which should help ease affordability pressures somewhat. While inflation is higher than the Bank would like, the need to stimulate the economy could result in further cuts and we could see demand for housing picking back up. However, the lack of supply means that even though monthly payments may become more manageable, securing a home could still present a challenge and prices may remain inflated.
"Prospective buyers will have a difficult environment to navigate, so seeking professional financial and mortgage advice will be crucial to help them secure the best deals in what remains an unpredictable market."
