UK house prices stagnant in March as London struggles
Desk Report: United Kingdom's house prices stagnated last month as London clocked up the lowest price growth in the country, while thousands of Britons raced to complete purchases before the end of a stamp duty holiday.
The average price of a home was unchanged at £271,316 in March, compared with February’s 0.4% monthly rise, according to Nationwide building society.
The annual growth rate stayed at 3.9%, masking big regional variations. In Northern Ireland, annual price growth accelerated to 13.5%, the highest in the region since 2021. Scotland posted a 3.9% annual rise, while Wales was close behind at 3.6%.
London had the lowest annual price growth across the UK, as the rate dipped to 1.9% from 2%. However, it remained the most expensive place to buy a home, with an average price of £529,369, while Northern Ireland was the cheapest, with the average price at £205,796.
Robert Gardner, the Nationwide chief economist, said the price trends were unsurprising, given the end of the stamp duty holiday at the end of March.
“Indeed, the market is likely to remain a little soft in the coming months since activity will have been brought forward to avoid the additional tax obligations – a pattern typically observed in the wake of the end of stamp duty holidays,” he said.
Buyers have been rushing to complete their purchases in recent months, while removals firms have been swamped. The stamp duty thresholds, which were temporarily increased in September 2022, have fallen back after the 31 March deadline, which means some buyers could end up paying thousands of pounds more in tax.
It usually takes longer than a month to complete, so demand waned before the end of the stamp duty deadline. Mortgage approvals were the lowest in six months in February, according to Bank of England figures.
Activity is likely to pick up steadily as the summer progresses, despite high uncertainty in the global economy, because underlying conditions for homebuyers in the UK remain supportive, Gardner said.
He noted that the unemployment rate is low, earnings are rising at a healthy pace in real terms – after accounting for inflation – household balance sheets are strong and borrowing costs are likely to moderate a little if the Bank of England cuts interest rates again in the months to come.
Financial markets are expecting two more interest rate cuts this year, and predict a 68% chance of a reduction in May.
Tom Bill, the head of UK residential research at Knight Frank, expects a dip in activity as demand effectively resets from April. He said: “Buyers coming back into the market with a re-levelled playing field will find that supply is strong, which should keep downwards pressure on prices.
“Activity should recover by the summer but borrowing costs could be held higher for longer by erratic US trade policy and the inflationary impact of measures like the employer national insurance changes.”
Semi-detached houses have posted the biggest rise in prices over the past 12 months, and their average prices were up 4.8% year on year, according to the Nationwide report. News: the guardian.com
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