UK house prices grew for the sixth month in a row in February despite signs of a sluggish economy, according to a building society, as economists expected a rush of people trying to complete purchases before stamp duty increases in April.
The average UK house price rose by 0.4% during the month, up from 0.1% the month before, according to an early measure from Nationwide, Britain’s biggest building society. The average price of a house bought through Nationwide grew to £270,493.
The increase meant that prices grew by 3.9% over the last 12 months, although that was slightly slower than the 4.1% annual rate recorded in January.
Measures of housing market activity have shown house prices steadily accelerating, after a decline between mid-2023 and the spring of 2024. Nationwide’s house price index is one of the earliest measures of movements in the UK housing market, ahead of indices from Halifax bank and the Land Registry.
However, UK average annual house price growth has not yet approached the rates of more than 10% hit in 2022, during the boom prompted by the coronavirus pandemic.
Robert Gardner, Nationwide’s chief economist, said “housing market activity has remained resilient in recent months, despite ongoing affordability challenges”.
He noted “a noticeable pickup in total housing transactions” in the second half of 2024, although the number of deals during the year was still 6% below the level of 2019, the last year unaffected by the pandemic.
Ashley Webb, an economist at the consultancy Capital Economics, said that some of the increase may have been caused by people bringing forward purchases in order to avoid an increase in stamp duty, but that the figures still suggested “the housing market continues to shrug off both the weak economy and the recent rises in mortgage rates”.
Temporary cuts to stamp duty on some purchases brought in by Liz Truss’s Conservative government will end on 1 April in England and Northern Ireland. Scotland and Wales set different taxes on house purchases.
From 1 April, first-time buyers will have to pay tax on homes worth more than £300,000, down from £425,000, and the threshold for a reduced rate for first-time buyers will drop from £625,000 to £500,000. The zero-tax stamp duty threshold that applies to all housing in England will drop to £125,000 from £250,000.
Gardner said: “The changes to stamp duty at the start of April are likely to generate volatility in transactions in the near term, as buyers bring forward their purchases to avoid the additional tax.
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“This will likely lead to a jump in transactions in March, and a corresponding period of weakness in the following months.”
Financial results from Rightmove, the UK’s biggest online property website, suggested that Britons’ interest in property purchases remained undimmed during 2024. It said people spent 16.4bn minutes on its site during the year – or 31,202 years – up 6% compared with 2023.
It was the fourth-busiest UK website, behind only the BBC, the newspaper group Reach and the government’s Gov.uk.
The FTSE 100 company said on Friday that annual sales had increased by 7% to £390m during 2024, although profits were flat.
Article by:Source: Jasper Jolly
