UK house prices ticked up 0.4% in February, hitting £270,493, marking six months of gains, Nationwide’s latest House Price Index revealed on Friday.
This annual rise of 3.9% is slightly below January’s 4.1% figure.
Robert Gardner, Nationwide’s chief economist, says this sustained growth to buyers expediting purchases ahead of the impending stamp duty changes set for 1 April.
These changes will lower the nil-rate threshold from £250,000 to £125,000, effectively increasing the tax burden on property acquisitions.
MARKET VOLATILITY
Gardner anticipates that this policy shift will introduce volatility in the housing market, with a surge in transactions expected in March, followed by a potential slowdown in subsequent months.
He says: “Housing market activity has also remained resilient in recent months, despite ongoing affordability challenges. Indeed, the second half of 2024 saw a noticeable pick up in total housing transactions, which were up 14% compared with the same period in 2023.
MOMENTUM WILL HOLD
First-time buyers are the comeback stars, with 2024 mortgage completions just 5% shy of 2019 – somewhat impressive amidst 4.4% 5-year fixed rates (up from 2% pre-COVID). Cash buyers also took the driving seat with deals 2% above pre-pandemic levels. Gardner sees momentum holding but the stamp duty clock is ticking.
INDUSTRY REACTION
Tom Bill, Head of UK Residential Research at Knight Frank, says: “House price growth has come under downwards pressure this year as supply exceeds demand.
“Buyers are no longer navigating the choppy waters of double-digit inflation but they are swimming against a gentle and unpredictable current as Budget plans are implemented and the government seeks economic growth.
“We expect low single-digit house price growth this year that will hopefully surpass the rate of CPI inflation.”
ON THE FRONT FOOT
Verona Frankish, Chief Executive of Yopa, says: “The UK property market has begun the year on the front foot and we’re now seeing the rate of house price growth start to accelerate, as more buyers push on with their plans to purchase following a brief respite over the Christmas period.
“A degree of this increased activity in recent months has, of course, been spurred by the impending stamp duty deadline at the end of March, with those making their move keen to reach completion and avoid any increased cost when buying.
“However, we’ve seen the vast majority of buyers take the potential stamp duty cost increase into consideration before submitting their offers, so whilst there may be a momentary market correction, we expect momentum to continue building beyond 1st April.”
POSITIVE PERFORMANCE
Marc von Grundherr, Director of Benham and Reeves, says: “A consistently positive performance has been the theme for the UK property market over much of the last year and this theme has so far continued in 2025.
“House prices may not be climbing at the same rate as previous market peaks, but some may argue that this more measured rate of growth is far healthier for the market, particularly when you consider that first-time buyer activity is on the up, despite the fact that this market segment faces the toughest task with respect to affordability.”
FIRST-TIME BUYER RUSH
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, says: “We have noticed, in our offices, a rush of first-time buyers in particular, trying to take advantage of lower stamp duty rates, which has skewed some parts of the market.
“Now it is almost too late to benefit from the concession, we are seeing prices settle and more balance between supply and demand.
However, a shortage of houses, not flats, in some price ranges remains, which is continuing to drive interest and helping to maintain activity.”
AFFORDABILITY CONSTRAINTS
Amy Reynolds, Head of Sales at Richmond estate agency Antony Roberts, says: “Property prices are not running away with themselves, due to affordability constraints, higher mortgage rates and cautious buyer sentiment.
“The imminent end of the stamp duty holiday brought a flurry of new activity, which is coming to an end but being replaced with buyer demand for houses in the £1m to £2m range, as we would expect at this time of year in a more ’normal’ market.
“Any fully-renovated home is bucking the trend and will be popular regardless of the price point. Prices are unlikely to fall because there is limited stock in prime areas, but equally prices won’t rise until mortgage rates are deemed to be more ‘affordable’ again.”
CONTINUOUS DEMAND
Matt Thompson, Head of Sales at Chestertons, says: “February’s property market saw a decline in first-time buyer enquiries as the chances of finding a property in time to beat the changes to stamp duty are now nil.
“We did, however, see continuous demand from other buyer demographics; especially after the Bank of England announced a rate cut to 4.5%.
“With the news of sub-4% mortgages returning to the market, we expect more house hunters to start their search over the coming weeks.”
BUILDING MOMENTUM
Nathan Emerson, Chief Executive of Propertymark, says: “Year on year it is positive to see progression within the housing market, and it is encouraging to see momentum continue as we head further into 2025.
“There are still aspects to be mindful of, however, such as how inflation could influence future base rate decisions and what effect on affordably that could have.
“With inflation now sitting at 3%, which is above the Bank of England’s initially targeted level, we could see it becoming potentially more challenging for people to approach the buying and selling process should this translate into higher interest rates as a result.”
RESILIENT MARKET
Iain McKenzie, Chief Executive of The Guild of Property Professionals, says: “The sales market has continued to show positive momentum, with this increased activity helping to support house prices at the start of the year.
“While affordability remains a concern, along with persistent inflation, the property market is resilient, and the early months of 2025 have shown improvement compared to the same period in 2024.
“A rise in the number of homes for sale has provided buyers with more choice and negotiating power, while the influx of new buyers has further driven market activity.
“Although the Bank of England will need to strike a balance between tackling higher-than-expected inflation and stimulating the economy, the base rate is still expected to come down further this year. However, this will depend on several factors and is likely to happen at a slower pace than initially anticipated.
“Decreasing interest rates and robust earnings growth will help sustain market activity, which in turn should support house prices throughout 2025.
JITTERY MARKET
Mark Harris, Chief Executive of mortgage broker SPF Private Clients, says: “With some lenders pulling their cheapest fixed rates, at the same time as others are launching them, the market is very jittery which makes it difficult to plan ahead.
“The recent surprise increase in inflation has reduced the likelihood of another imminent reduction in interest rates.
“It wasn’t so long ago that there was talk of five potential interest rate cuts this year, but that is looking increasingly unlikely.
“Borrowers must plan ahead as much as possible and seek advice from a whole-of-market broker. Locking into a rate makes sense and gives peace of mind when there is so much uncertainty and if rates are cheaper by the time you come to take out your mortgage, it should be possible to switch to a cheaper deal at that time.”
STEADY ACTIVITY
Tomer Aboody, Director of specialist lender MT Finance, says: “The lower mortgage rate environment we have experienced over the past 12 months has helped maintain steady market activity both for first-time buyers and buy-to-let landlords, along with buyers looking to upsize and downsize.
“The banks have been more encouraged to lend and have been more flexible in their approach.
“With the looming changes to stamp duty upon us, some are more apprehensive about the upcoming months and how the market will react to the fallout from Reeve’s October Budget. Many are hoping for further rate cuts or increased flexibility from lenders.”
