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UK house prices unexpectedly stalled in March, according to the lender Nationwide, reflecting some weakness as the stamp duty tax break comes to an end.
The average UK house price registered no growth between February and March, leaving the average cost of a home at £271,316, data showed on Tuesday.
House prices were up 3.9 per cent from March last year, unchanged from the annual rate in February.
Economists polled by Reuters had forecast a 0.2 per cent month-on-month rise and a 4.1 per cent annual increase.
Robert Gardner, Nationwide’s chief economist, said the price trends were “unsurprising, given the end of the stamp duty holiday at the end of March”. Transactions associated with mortgage approvals made in March, especially towards the end of the month, would be unlikely to be completed before the deadline, he explained.
“Indeed, the market is likely to remain a little soft in the coming months since activity will have been brought forward to avoid the additional tax obligations — a pattern typically observed in the wake of the end of stamp duty holidays,” said Gardner.
The pause of the levy introduced in September 2022, when mortgage rates were rapidly rising, ended in March. House purchases for first-time buyers completed from April 1 will start paying the levy on properties of £300,000 or more, rather than £425,000 at present, with similar changes for non-first-time buyers.
Separate data published on Monday by the Bank of England showed that mortgage approvals marginally declined in the first two months of this year. However, in February, the number of mortgage approvals was still 8.2 per cent higher than in the same month last year and at similar levels to 2019, before the pandemic, indicating how the property market has recovered from the lows seen in 2023 when mortgage rates peaked.
