"The softening in house price growth was to be expected, given the changes to stamp duty at the start of the month. Early indications suggest there was a significant jump in transactions in March, with buyers bringing forward their purchases to avoid additional tax obligations"
- Robert Gardner - Nationwide
The latest data released by Nationwide this morning has revealed that the annual rate of house price growth slowed to 3.4% in April, from 3.9% in March. The price of a typical home in the UK now stands at £270,752 - down from £271,316 in March.
“April saw a slowing in UK house price growth to 3.4%, from 3.9% in March. House prices fell by 0.6% month on month, after taking account of seasonal effects," explained Nationwide's chief economist, Robert Gardener.
“The softening in house price growth was to be expected, given the changes to stamp duty at the start of the month. Early indications suggest there was a significant jump in transactions in March, with buyers bringing forward their purchases to avoid additional tax obligations."
Looking ahead
“The market is likely to remain a little soft in the coming months, following the pattern typically observed following the end of stamp duty holidays. Nevertheless, activity is likely to pick up steadily as summer progresses, despite wider economic uncertainties in the global economy, since underlying conditions for potential home buyers in the UK remain supportive.
“Unemployment remains low, earnings are rising at a healthy pace in real terms (i.e. after accounting for inflation), household balance sheets are strong, and borrowing costs are likely to moderate a little if Bank Rate is lowered further in the coming quarters as we and most other analysts expect. Indeed, swap rates (which underpin fixed rate mortgage pricing) have moderated in recent weeks.”
Industry reactions
Tom Bill, head of UK residential research at Knight Frank, said, “House prices have come under pressure since the start of the year as supply outpaced demand, with buyers hesitating due to the stamp duty cliff edge in April and wider mood of economic uncertainty.
"However, the turbulence caused by US trade tariffs has since put downward pressure on mortgage rates, which, together with the better weather, will support demand. The risk is that inflationary pressures creep back into the system for reasons that include recent employer tax changes, which could mean the Bank of England slows the pace of rate cuts. Together with renewed speculation ahead of the autumn Budget, it could curb buyer numbers after the summer.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says, “Not surprisingly, house prices have softened a little now the rush to take advantage of the stamp duty holiday has passed.
“However, most sellers have kept their properties on the market and with approximately four out of five also said to be buyers, activity has been maintained at a higher level than we perhaps dared to hope.
“Looking forward, we anticipate much the same although economic uncertainty will continue to reduce confidence the longer that any much-anticipated cut in interest rates is delayed."
Director of Benham and Reeves, Marc von Grundherr, commented, “A marginal decline in the rate of house price growth was to be expected given the recent stamp duty deadline, however, this is nothing more than a momentary pause for breath following a heightened sense of urgency to complete on the side of the nation’s homebuyers prior to 1st April.
"Now that the dust has settled, we expect to see an increase in market activity over the coming months, as many buyers and sellers look to press on with their plans for the year.
"This will help to further cultivate a property market that has stood very firm, despite the wider economic headwinds that have blown fiercely in recent months.”
CEO of Yopa, Verona Frankish, commented, “Stability has been key to the returning health of the UK property market and, whilst we may have seen a brief period of respite following the March stamp duty deadline, buyers continue to re-enter the market, spurred by reductions to interest rates and a more settled mortgage landscape.
With another base rate cut looking likely this month we expect market momentum will continue to build and any stagnation in the rate of house price growth will be short lived.”
CEO of Octane Capital, Jonathan Samuels, commented, “It’s clear that improvements to the mortgage market and the lower rates being offered by lenders have helped to drive market confidence in recent months.
"Of course, mortgage rates still remain higher than many buyers have become accustomed to in previous years and this has resulted in a more measured market performance where house price growth is concerned.
"However, we’ve seen monthly mortgage approval numbers sit above the 60,000 threshold since January of last year, which demonstrates buyer confidence in the market and bodes very well for the year ahead.”
Nathan Emerson, CEO of Propertymark, comments, “Despite economic uncertainty globally, it is encouraging to see house prices remain resilient month on month. This provides many aspiring home movers with a perfect opportunity to investigate the marketplace more robustly and potentially better negotiate their next steps on the property ladder.
“The housing market remains one of the many backbones of the UK economy, but with average house prices across the UK typically sitting at around seven times the average annual gross salary, the UK Government and devolved administrations need to make fulfilling their housing targets a priority to help even out long-standing demand versus supply issues.”
Matt Thompson, head of sales at Chestertons, says, “A lot of property sales that would have happened in April were finalised in March instead as buyers were driven to beat the changes to Stamp Duty thresholds. In comparison, house hunters who entered the market in April were in less of a rush with some even pausing their search amid the Easter holidays.
"Sellers, on the other hand, remained motivated, and we have seen a clear uplift in homeowners listing their property for sale in April year on year. We therefore expect market activity and particularly buyer demand to pick up in early May, which will lead to a busier than usual summer market.”
