The UK Housing Market: A Busy Start with Upcoming Changes on the Horizon

The UK housing market began 2024 with high activity. Buyers hurry to finish deals. They do this as stamp duty rules change on 1 April. Experts warn that later in the year the market might slow and buying a property may cost more.

Shifts in Stamp Duty Thresholds

Buyers now pay stamp duty on properties over £250,000. First-time buyers pay nothing on homes up to £425,000. On 1 April, these limits will drop to £125,000 and £300,000. Many see this change as a risk to property affordability. As the new rules near, demand falls a bit.

Halifax’s House Price Index shows a 0.1% price drop in February 2024. This suggests the market cools as the deadline comes close. With falling mortgage rates and wages rising faster than house prices, buyers may rush to buy before the new rules start.

Market Resilience Amidst Challenges

Prices fell slightly by Halifax, but market action stays strong. New sellers grew by 13% compared to last year. Buyer interest increased by 8%. The number of agreed sales grew by 15%. Andrew Tucker from Bidwells sees a gap between supply and demand. He says this gap will keep prices high for now.

"Household earnings beat inflation. This should keep demand strong," he said. He urges buyers to act now before the new rules change the scene.

Recent Price Insights and Trends

HM Land Registry data shows that in early 2024 property prices grew by 4.6%. The average house now costs £268,000, which is £12,000 more than last year. Despite a two-month delay in official data, reports from Nationwide and Zoopla give more hints.

Zoopla’s index shows that houses are much higher in value than flats. Houses now have a 30-year high value, costing about 67% more than flats. Richard Donnell from Zoopla ties this gap to the pandemic. Buyers now look for more room while flats face higher service charges.

The Asking Price Landscape

Asking prices show market feelings. However, they are not the final prices. Rightmove noted a 0.5% monthly rise in asking prices in early February. This is a bit below the usual 0.8%. Colleen Babcock from Rightmove says new sellers now set cautious prices. They watch the market and the new stamp duty rules closely.

Future Predictions: What Lies Ahead in 2025?

Soon after the stamp duty changes, the market may slow. Real estate firm Knight Frank predicts a 2.5% price rise in 2025. Savills expects a 4% increase. They also see that regions will change differently. The North may see stronger rises than the South, where costs are already high.

Those who plan to invest in property, especially in HMOs, must watch market shifts and stamp duty changes. This will help them make smart choices in UK property.

Conclusion

The start of 2024 brought much action to the UK housing market. Buyers are quick to work before the stamp duty changes. Although the market may slow soon, strong demand from good mortgage rates and rising wages should keep prices steady for a while. Investors must pay attention to market trends and rule changes to choose well when buying property.

Sources:

• Halifax House Price Index
• Rightmove House Price Index
• HM Land Registry
• Zoopla Property Index
• Knight Frank Market Predictions
• Savills Property Forecasts

Staying aware of market trends helps buyers and investors plan in the changing UK property market.