Ominous warning issued to homeowners despite house price rise

The average UK has risen for the sixth consecutive month, but upcoming changes to may dampen the market, according to an index.

values jumped by 0.4% month-on-month in February, bringing the average house price to £270,493, Nationwide Building Society said. On an annual basis, house prices rose by 3.9%.

Robert Gardner, Nationwide’s chief economist, said: “House prices increased by 0.4% month-on-month, after taking account of seasonal effects – the sixth consecutive monthly gain.

“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.”

Iain McKenzie, chief executive of the Guild of Property Professionals, noted an increase in the number of homes for sale has provided buyers with more choice and negotiating power. The influx of new buyers has also “further driven market activity.”

However, stamp duty discounts are set to become less generous in April, with the “nil rate” threshold for first-time buyers reducing from £425,000 to £300,000 in England and Northern Ireland.

For regular buyers, the nil-rate threshold will drop from £250,000 to £125,000.

Nationwide’s report predicts that the stamp duty changes may lead to a surge in sales in March, followed by weaker market activity in the following months.

Karen Noye, a expert at Quilter, said: “The sharp rise in tax bills expected due to the lowering of stamp duty thresholds has seen many buyers forge ahead with purchases that they might otherwise have held out on, and house prices could bloat as a result.

“While prospective buyers will need to take care that they do not end up paying over the odds for a home, particularly given they will now be cutting it very fine to get a sale across the line before the change comes in, it is understandable that they would wish to mitigate the tax bills.”

Jeremy Leaf, a north London estate agent, has observed “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.

Mr Leaf said: “Now it is almost too late to benefit from the concession, we are seeing prices settle and more balance between supply and demand.”

However, he noted: “A shortage of houses, not flats, in some price ranges, remains, which is continuing to drive interest and helping to maintain activity.”

Jonathan Handford, managing director at estate agent group Fine & Country, added: “With a heated market, looming tax changes, and economic uncertainty, the coming months will be crucial. If borrowing costs remain favourable and inflation stabilises, buyer confidence could hold steady – but if affordability worsens, the housing market may face fresh challenges as 2025 unfolds.”