UK house prices dip after stamp duty deadline rush

UK house prices experienced their biggest monthly drop in a year, falling by 0.5% in March to an average of £296,699, according to Halifax. This decline follows a surge in activity earlier in the year, as buyers rushed to complete purchases ahead of changes to stamp duty rules in England and Northern Ireland, which came into effect on 1 April.

The drop marks the second consecutive month of falling house prices, as February also saw a slight downward revision. The fall comes after a peak in January, when demand was unusually high due to the approaching tax deadline.

The stamp duty changes included the end of temporary cuts introduced during the pandemic. From April, first-time buyers in England and Northern Ireland now pay stamp duty on properties over £300,000, down from the previous threshold of £425,000. The general zero-tax threshold also dropped from £250,000 to £125,000. These changes do not apply in Scotland or Wales, which have separate property tax systems.

Despite the recent slowdown, annual price growth remained positive in March at 2.8%, although it has been gradually easing from previous months. Analysts expect housing demand to remain stable through the year, supported by improving mortgage rates and limited housing supply.

Currently, average mortgage rates have edged slightly lower. A two-year fixed deal averages 5.32%, and a five-year fixed sits at 5.17%, according to Moneyfacts. The number of mortgage products on the market continues to rise, offering buyers more options.

While short-term market momentum has softened, the longer-term outlook remains steady, with many expecting increased activity in the spring and summer months.