UK house prices recorded their sharpest monthly fall in a year as the housing market cooled following a rush of buyers trying to beat changes to stamp duty thresholds in England and Northern Ireland.
According to Halifax, the average price of a home fell by 0.5% in March to £296,699 – marking the largest monthly drop since March 2023. This was the second consecutive decline, with February’s figure revised down from a 0.1% dip to a 0.2% fall.
The pullback follows a mini-boom in January, when property prices surged to a record high as buyers scrambled to complete transactions before changes to stamp duty came into effect on 1 April.
“House prices rose in January as buyers rushed to beat the March stamp duty deadline,” said Amanda Bryden, head of mortgages at Halifax. “However, with those deals now completing, demand is returning to normal and new applications are slowing.”
The changes, introduced by Chancellor Rachel Reeves in her October budget, ended the temporary stamp duty cuts introduced in England and Northern Ireland during the pandemic. First-time buyers now pay stamp duty on properties worth more than £300,000, down from £425,000, while the upper threshold for a reduced rate has fallen from £625,000 to £500,000. The standard zero-rate threshold for all buyers has also been halved, from £250,000 to £125,000.
Halifax reported a significant spike in completions in March, with the volume of house sales exceeding those in January and February combined. “It included the busiest single day on record,” said Bryden. “Following this burst of activity, house prices, which remain near record highs, unsurprisingly fell back last month.”
Despite the slowdown, analysts remain cautiously optimistic about the outlook for the housing market in 2025. A continued imbalance between supply and demand is expected to support prices, and falling mortgage rates could bring further stability.
The Bank of England is widely expected to cut the base interest rate up to three more times this year, each by 0.25 percentage points – a move that would provide additional relief for buyers and support affordability.
“Hopefully this month-on-month dip is only temporary,” said Nathan Emerson, chief executive of Propertymark. “The spring and summer months normally spur on a flurry of housing activity, especially at a time when there are many competitive mortgage deals out there as a result of last year’s rate reductions.”
Mortgage rates have edged down again, with Moneyfacts reporting the average two-year fixed deal now at 5.32%, and the five-year fixed rate at 5.17%. Meanwhile, the number of residential mortgage products continues to rise, hitting 6,945 – up slightly from 6,936 at the end of last week.
Despite this, Halifax’s data indicates a broader softening in market momentum. Annual house price growth stood at 2.8% in March – unchanged from February, but down from 3.4% in December and 4.7% in November.
While the latest data suggests the market is rebalancing after a volatile start to the year, all eyes will be on how buyers and sellers respond to changing economic conditions over the coming months.
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UK house prices fall after stamp duty rush cools market momentum
