UK house prices unexpectedly dipped in February, Halifax data revealed on Friday.
Residential property prices fell slightly by 0.1% month-on-month in February, after increasing by a revised 0.6% in January.
“February’s figures highlight the delicate balance within the UK housing market,” Amanda Bryden, head of mortgages at Halifax, said.
“While there’s been talk of a last minute rush on new mortgages ahead of the changes to stamp duty, inevitably we’ve seen some of the demand that was brought forward start to fade as the April deadline ticks closer, given the time needed to complete a purchase,” she added.
Industry reaction:
Matt Thompson, head of sales at Chestertons, said: “In February, the property market saw a higher volume of enquiries from parents who are looking for a property in catchment areas of highly-rated state schools. This resulted in larger family homes attracting interest from multiple buyers. With the introduction of sub-4% mortgages, we also witnessed growing buyer confidence amongst second-steppers and, despite to the looming changes to Stamp Duty, still registered a number of first-time buyers who are eager to get on the property ladder.”
Tom Bill, head of UK residential research at Knight Frank, said: “Despite a rush to complete ahead of the stamp duty increase in April, supply outpaced demand in the first two months of this year, which kept downwards pressure on house prices. That pressure will be sustained if more inflation creeps into the UK economy through measures such as raising employer national insurance contributions. We were also reminded this week of how global politics can act as a brake on the market when Germany announced a defence spending increase, which pushed up borrowing costs in Europe. We expect low single-digit house price growth this year but the outlook is changeable.”
Verona Frankish, CEO of Yopa, commented: “The UK property market has continued to stand strong with house prices remaining higher than this time last year, driven in part by the rush to beat the stamp duty deadline at the end of this month.
“Whilst the average home buyer is set to see stamp duty costs increase by £2,500 as of April, this is unlikely to deter them from their quest to climb the property ladder and so we expect to see further growth materialise as the year progresses.”
Iain McKenzie, CEO of The Guild of Property Professionals, said: “It’s encouraging to see the housing market’s continued resilience as we move into 2025, with both transaction levels and sales agreed figures showing year-on-year growth at the start of the year.
“The market remains active, driven by first-time buyers rushing to complete deals ahead of stamp duty changes and needs-based buyers who postponed decisions during 2024’s volatility. Strong earnings growth is also supporting activity. However, a greater supply of homes for sale and the impending stamp duty deadline are expected to keep price inflation in check.
“Both demand and supply have increased across all property types, though market dynamics vary. Detached houses are in growing demand, with an 18% year-on-year rise in the demand-to-supply ratio, while demand for flats has slightly declined since January 2024.
“Despite higher-than-expected CPI inflation, the Bank of England cut the base rate to 4.5% in early February, prompting several major banks to follow suit. This comes as a welcome relief after fixed-rate mortgage rates rose in early 2025, with some lenders reversing the cuts made in late 2024 following gilt yield spikes. Now, this trend appears to be shifting, with the lowest fixed-rate mortgages dipping below 4% for the first time in months as competition among lenders intensifies.”
Gareth Samples, CEO of The Property Franchise Group, remarked: “The market remains robust, with house prices supported by the year-on-year increase in activity seen at the start of 2025. Factors such as lower interest rates and wage growth have also contributed to a stronger foundation for sustained growth throughout the year.
“The momentum built up towards the end of 2024 has carried over into early 2025. This is partly due to first-time buyers rushing to meet the Stamp Duty deadline, as well as needs-based buyers who had been waiting for more favourable interest rates.
“While demand has risen, the supply of homes on the market has also increased, providing buyers with more choice and greater negotiating power. The larger number of properties available, coupled with the impending Stamp Duty deadline, is expected to keep price inflation in check.
“Although the higher-than-expected jump in CPI inflation has created a few bumps in the downward trajectory of the base rate, February’s cut to 4.5% has been a welcome relief for many. Since then, competition in the mortgage market has intensified, with the lowest fixed-rate mortgages dipping below 4% for the first time in months.”
Jonathan Handford, MD at Fine & Country, said: “House prices stabilised in February, marking a shift as buyers weigh up impending tax changes set to take effect in April.
“A key factor influencing recent market activity has been the upcoming revision to the stamp duty threshold for first-time buyers. Currently set at £425,000 for first-time buyers, this threshold will be lowered to £300,000 from 1 April 2025. For many aspiring homeowners, this means higher tax costs, making it more expensive to take that crucial first step onto the property ladder.
“Beyond tax policy, broader economic conditions are also shaping the market. In February, the Bank of England cut the base rate to 4.5%, a move expected to make mortgage repayments more affordable and potentially stimulate demand.
“In January, mortgage approvals remained relatively steady compared to December but were up 18% year-on-year. This suggests buyer confidence has strengthened over the past year, even as the market faces near-term uncertainty.
“However, this slight drop in house prices signals that demand may be easing. As the April deadline approaches and tax changes take effect, some buyers could hold off on purchases, potentially leading to further price adjustments.
Marc von Grundherr, director of Benham and Reeves, added: “Despite mortgage rates remaining higher than today’s buyers have become accustomed to, the property market has remained resilient in the face of uncertainty.
“With the winter months now behind us, it’s onwards and upwards from here as we approach the spring selling season and the busiest time of year for market activity and as more buyers look to make their move in 2025, house prices will remain stable and continue along their upward trajectory.”