The UK property market is beginning to feel the effects of the impending stamp duty deadline, with February’s average asking price rising by a modest 0.5% (+£1,805) to £367,994, latest data from Rightmove reveals.
This is below the longer-term February average of +0.8%, reflecting both a more cautious approach from sellers and a reaction to an unusually high number of listings at the start of 2025.
The heightened level of available stock – running at a 10-year high – has diminished sellers’ pricing power as competition intensifies.
At the same time, rising stamp duty charges set to take effect from April are influencing buyer behavior, particularly in the mid-to-high price brackets.
STAMP DUTY IMPACT
While first-time buyers in lower-priced areas may remain largely unaffected, those purchasing homes between £500,001 and £625,000 face a significant financial hit, with up to £11,250 in additional costs.
London is expected to see the largest log-jam of buyers racing to complete transactions before March 31st, with 28% more first-time buyers currently in the completion process compared to last year.
EXTRA COSTS
Colleen Babcock, property expert at Rightmove, warns: “Some of the steam is coming out of sellers’ price expectations as they adapt to shifting market conditions.
“While some buyers will be unaffected by the stamp duty deadline, others could face substantial extra costs. A short extension from the government would be a justified step given the likely conveyancing log-jam.”
Rightmove has reiterated its call for reforms, advocating for regional variations in stamp duty to create a fairer system. The current transaction process, which takes an average of five months to complete, has put pressure on buyers who have been working against the clock since November to finalize deals before the new charges take effect.
MORTGAGE MOMENTUM
Despite stamp duty concerns, broader housing market activity remains strong. Buyer demand is 8% ahead of this time last year, with agreed sales up 15%.
Mortgage activity is also accelerating, with a record number of mortgage-in-principle applications in January – 49% higher than a year ago.
Matt Smith, mortgage expert at Rightmove, says: “With the Bank of England cutting rates for the first time in years, we’re finally seeing some downward movement in mortgage rates. While dramatic cuts are unlikely, we’re already seeing sub-4% rates emerge, which will further support buyer confidence.”
OUTLOOK
While some buyers are negotiating on price to offset higher stamp duty costs, most appear committed to moving ahead with purchases.
Marc von Grundherr, Director of London agent Benham & Reeves, says: “The average London first-time buyer could see stamp duty costs rise by £6,000-£10,000 but the majority are still proceeding.
“Some are adjusting their offers, but we’re not seeing significant buyer withdrawals.”
Andrew Tucker, Joint Head of Residential Sales at Bidwells, adds: “The impact of the stamp duty changes varies by location.
“But overall, supply and demand imbalances continue to support prices, while mortgage demand remains strong. With base interest rates expected to fall further, costs for buyers could ease in the months ahead.”
REGIONAL TRENDS
