UK house prices pause for breath as stamp duty rush eases

After a period of steady growth, UK house prices have taken a breather, with the latest figures from Halifax showing no rise in February – a slight surprise given most economists had expected a modest increase.

The average property price now sits at £298,602 – just a touch below January’s record high of £298,815. This small dip of 0.1% comes after prices climbed 0.6% the previous month.

Despite this pause, house prices are still 2.9% higher than they were this time last year, with annual price inflation holding steady.

So, what’s behind this shift?

STAMP DUTY EFFECT

Many economists had predicted a 0.3% rise in February, aligning with the slight increase reported by Nationwide. However, Halifax’s data often reflects market changes faster than Nationwide’s, and their latest figures suggest the rush to beat April’s stamp duty changes has already started to fade.

Amanda Bryden, Head of Mortgages at Halifax, explained that the surge in demand earlier this year – as buyers hurried to complete deals before tax adjustments – is now softening.

Indeed, this shift has affected different segments of the market in different ways. For instance, first-time buyer properties saw price inflation ease to 2.4% in February but next-step homes – typically bought by those moving up the property ladder – continued to rise, with prices up 3.7% year-on-year.

Bryden described this as a “delicate balance” within the UK housing market, pointing out that while overall growth has slowed, buyer activity remains strong and comparable to pre-pandemic levels – a sign of resilience despite higher mortgage costs.

REGIONAL DIFFERENCES

Not all regions followed the same pattern. Scotland bucked the trend, with house prices rising 3.8% compared to a 2.5% increase in January. While Northern Ireland remains the fastest-growing region, holding steady at 5.9% annual growth.

Meanwhile London, the UK’s priciest property market, saw annual price growth slip from 2.6% in January to 1.6% in February.

WHAT’S NEXT FOR HOUSE PRICES

Looking ahead, Halifax expects prices to continue rising throughout 2025 – but at a slower pace. Last year, property prices climbed by 3.4%, but Bryden suggests this year’s growth will likely be more modest.

While affordability challenges remain a hurdle for many, the ongoing housing supply shortage combined with steady demand means house prices are unlikely to fall anytime soon.

For those considering buying or moving, the message seems clear: prices are still rising, but the frantic rush seen earlier this year has calmed.

What does this mean for your mortgage options?

With house prices stabilizing – but still creeping upwards – many buyers are wondering how this affects their mortgage choices.

For first-time buyers, the slight easing in price inflation may offer a small window of opportunity. While homes are still expensive, the cooling of the post-stamp duty rush could mean less competition, giving you more time to find the right property and secure a mortgage deal.

However, borrowing costs remain a key factor. Interest rates are still higher than they were a few years ago, so it’s crucial to review your budget carefully and factor in potential rate changes to ensure you can manage repayments long-term.

And as always, it’s important to explore all the mortgage options available to you.

Remember, fixed-rate deals provide stability, while tracker mortgages could work for those expecting rates to drop in the future.

For existing homeowners looking to move up the property ladder, the stronger price growth for next-step homes means you might get a better price for your current property - but you’ll also face higher prices for your next one.

While house prices aren’t surging like they were, the market remains resilient. The key is to plan ahead, understand your mortgage options and act when the time is right for you.

Remember, smart choices start with expert advice – speak to your mortgage adviser to get the best for your financial future.