The UK housing market has taken another unexpected turn, as February’s figures from Halifax revealed a 0.1 per cent monthly decline in house prices, bringing the national average to £298,602.
A tiny dip, yes – but it goes against analysts’ expectations of a 0.3 per cent rise, especially as the final surge in transactions before April’s stamp duty changes was expected to boost prices.
The reason for the drop can be blamed on economic uncertainty. Despite falling mortgage rates and a widely forecast rush of completions ahead of tax adjustments, buyers have remained cautious.
Who can blame them? The annualised increase in house prices has softened slightly also, to 2.9 per cent, a tad below the predicted 3.1 per cent. The Bank of England’s recent interest rate cut to 4.5 per cent was expected to drive greater buyer activity.
Property prices dipped slightly
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It may have done, but instead of a spike in prices, driven by sellers upping their prices ahead of the new stamp duty rules, the market is effectively just treading water. Perhaps that’s what the bank wanted anyway.
The coming stamp duty changes at the end of this month present a problem. First-time buyers in England and Northern Ireland will see the tax-free threshold lowered from £425,000 to £300,000.
Meanwhile, the zero-tax threshold for all buyers will revert to £125,000 from the temporary £250,000 level.
A flurry of purchasing had been expected in response, but February’s figures suggest that this may already have been absorbed into previous months’ transactions.
My concern is this: if more buyers did indeed make the effort to beat the hike, why have prices remained static and what does this mean for the usually buoyant spring period?
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With headlines dominated by talk of tariffs, trade wars, stock market crashes and even a recession in the USA, it has had an incredible impact on UK house prices, far more than has been seen in the past.
Uncertainty causes buyers to pause, and whilst many think the current turmoil is performative with normal service to be resumed soon, the impact is being felt up and down Britain.
This is pretty ironic. Because UK property has previously remained astonishingly immune to global issues, proving to be a safe haven for investment for decades.
With the US setting the agenda and re-writing policy tweet by tweet, these are unusually unpredictable times. But for many investors, UK property will look like a safe harbour in which to weather the storm.
Jonathan is the founder of House Buy Fast. For more information visit www.housebuyfast.co.uk
