The growth in UK house prices eased in January as the usual New Year surge in property values began to moderate, data from property portal Rightmove PLC revealed on Monday.
According to the latest figures, the average asking price for newly listed properties rose by 0.5% year-on-year, equating to an increase of £1,805, bringing the average price to £367,994.
Rightmove described this as a "muted" rise for this time of year, attributing it to a decade-high number of homes available for sale. The increased supply is tempering price hikes, as sellers respond to shifting market dynamics.
Impact of the upcoming stamp duty change
Buyer activity has also been influenced by the approaching stamp duty threshold reduction in England. From April 1, the threshold for stamp duty liability will drop from £250,000 to £125,000, prompting some buyers to act swiftly to avoid higher tax costs.
"New sellers are exercising more caution in pricing after a strong start to the year," said Colleen Babcock, a property expert at Rightmove. "They are mindful of the high level of competition among sellers and, in England, the looming stamp duty deadline, which could mean additional costs for some buyers."
Estate agents are reporting a moderation in sellers’ price expectations as they adjust to current market conditions. This approach is expected to attract more buyers and maintain activity levels.
Babcock also highlighted concerns over the potential impact of the stamp duty change: "While some movers will be unaffected, others could face significantly higher costs. With conveyancing delays likely to cause some buyers to miss the deadline and pay additional tax through no fault of their own, a short extension before the end of March would be a reasonable move by the government."
Market activity and mortgage trends
Rightmove noted that over 550,000 sold properties are currently awaiting legal completion, a 25% increase compared to the same period last year. Mortgage activity has also surged, with applications for a mortgage in principle on Rightmove reaching record highs in January, up 49% year-on-year.
However, the property portal cautioned that wider economic conditions and global uncertainties could dampen market momentum. Investors and buyers are closely watching upcoming inflation and earnings data, which could influence sentiment in the months ahead.
Interest rate cuts and mortgage market outlook
Commenting on mortgage trends, Rightmove’s mortgage expert, Matt Smith, pointed to positive developments following the first Bank Rate cut of the year. "Current forecasts suggest we could see two or even three more rate cuts, potentially bringing the Base Rate down to 4% or lower by the end of the year," Smith said.
"The market has responded positively to the rate decision, and mortgage rates have begun to edge downwards. While we don’t expect drastic reductions, we’ve already seen the first sub-4% mortgage rates of 2025, which is encouraging for buyers," he added.
As the market navigates a high level of seller competition, an imminent stamp duty change, and evolving economic conditions, buyers and sellers alike will be keeping a close eye on further policy updates and mortgage rate movements in the months ahead.