House costs FELL in March as larger stamp obligation prices took maintain
- Average house prices fell by 0.5% in March, a drop of £1,575
The average home fell in value by £1,575 last month as buyers factored in higher stamp duty costs, the latest figures from Halifax show.
The typical house price fell 0.5 per cent in March, following a 0.2 per cent drop in February, according to the mortgage lender.
The average property is now worth £296,699, compared to £298,274 the previous month.
Despite the recent dip, house prices are still up 2.8 per cent year-on-year.
The stamp duty changes that came into effect on 1 April are thought to be behind the recent market lull.
Tax thresholds temporarily established in 2022 were lowered meaning purchasers who aren’t first-time buyers now start paying stamp duty if the property costs more than £125,000, down from a threshold of £250,000.
House prices drop: The average property price is now £296,699 compared to £298,274 in February
On a £250,000 property purchase this will mean paying an extra £2,500 in upfront taxes.
First-time buyers bore the brunt of the changes. Up until 31 March, they paid stamp duty if a home cost more than £425,000, but this has now dropped to £300,000.
In order to beat the stamp duty deadline, buyers needed to complete their sale before 1 April.
Halifax’s March data is based on mortgage agreements for sales that would have been likely to complete after the deadline.
‘House prices rose in January as buyers rushed to beat the March stamp duty deadline,’ said Amanda Bryden, head of mortgages at Halifax.
‘However, with those deals now completing, demand is returning to normal and new applications slowing.
‘Our customers completed more house sales in March than in January and February combined, including the busiest single day on record.
‘Following this burst of activity, house prices, which remain near record highs, unsurprisingly fell back last month.’
What next for house prices?
House prices may see further dips over the next month or two as buyers re-adjust their budgets for higher stamp duty costs.
However, this could be countered over the come weeks by falling mortgage rates.
In response to Trump’s tariff announcements on Wednesday, markets are now forecasting three further interest rate cuts this year by the Bank of England.
The general consensus is that interest rates will end up at 3.75 per cent by the end of 2025, rather than 4 per cent than was previously predicted.
Fixed-rate mortgage pricing is largely based on sonia swap rates – the inter-bank lending rate which shows where banks think mortgage rates will be two or five years in the future.
In the aftermath of the tariff announcements, swaps fell by as much as 0.4 percentage points suggesting lenders could begin cutting the rates on home loan deals.
Sonia swaps falling: Fixed-rate mortgage pricing is largely based on Sonia swap rates – the inter-bank lending rate, based on future interest rate expectations
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: ‘With swap rates falling considerably in recent days on the back of President Trump’s tariffs, a significant margin has opened up between swaps and mortgage rates.
‘If this continues, lenders could respond with a flurry of five-year fixed rates starting with a 3 as opposed to the current position of only one or two priced under 4 per cent.
‘This would help affordability and give buyers renewed confidence to make their move.’
However, while Trump’s tariffs could result in lower mortgage rates, it could also prove recessionary, which is more likely to push prices down than up.
‘With many economists predicting that the President’s tariffs will unleash a recessionary storm on the UK and much of the world, buyer demand could cool and push property prices down,’ said Jonathan Hopper, of buying agents Garrington Property Finders.
‘But at the same time, that threat of recession has increased the likelihood that mortgage interest rates will fall further and faster than previously thought.
‘With many lenders set to cut the cost of borrowing this week, and the Bank of England likely to cut the base rate up to three times this year, cheaper mortgages will allow buyers to afford more and support average prices.
‘The market is at a turning point, and with so many properties coming up for sale, sellers need to price their homes carefully or risk seeing them stuck unsold on the shelf.’
