In April, the decline in house prices was stark. This decline was happening right when Chancellor Rachel Reeves made changes to the stamp duty thresholds that are in effect now. First-time buyers have to start paying stamp duty on homes worth more than £300,000, lowering the threshold from £425,000.
As Nationwide’s chief economist Robert Gardener said, it was a “huge leap forward” in housing activity in March. This momentum didn’t extend into April, with house prices dropping by 0.6% month-on-month. The average house price is currently £270,752.
Ashley Webb from Capital Economics had this to say on the developing story. She cautioned that April’s decrease in home values represents the biggest month-over-month decrease since last August. He also noted that annual house price growth has dropped considerably over the past couple of years. Still, properties are more expensive—up 3.4% from a year ago.
“The market is likely to remain a little soft in the coming months.” – Robert Gardener, Nationwide’s chief economist
Even with house prices recently falling from record highs, Webb is still hopeful for a reversal in the years to come. Notably, he is forecasting that house prices are likely to increase 3.5% this year and as much as 4.5% in 2026. This optimism is echoed by agents at Foxtons, with Jean Jameson stating:
“With the anticipation of further rate cuts and mortgage provider competition, we expect to see the market accelerate through the gears over the remainder of the year.”
The recent changes to stamp duty will have a particular impact on first-time buyers, almost doubling the cost. Now the threshold for paying stamp duty is £300,000. Consequently, it will mean many first-time buyers will need to pay stamp duty, perhaps influencing what they buy and when.
Gardener anticipates purchasing action to pick up tremendously this summer. This increase will be driven by growing profitability and expectations of more interest rate cuts to come. This would increase competition between mortgage providers, driving down costs and strengthening the housing market even more.
In today’s housing market, cash buyers make up nearly one-third of all home transactions. Their deep pockets and playing the long game on supply might offer more cushion against roiling epicycles in the house price roller coaster.
