House prices increased by 3.9% over the year in February with the average UK property now worth £270,493 according to the latest data from Nationwide.
Over the last month house prices grew by 0.4% which is an improvement on the 0.1% monthly growth in January.
Nationwide said it’s the sixth consecutive month house prices have increased.
Robert Gardner, Nationwide’s chief economist, said: “Housing market activity has also remained resilient in recent months, despite ongoing affordability challenges. Indeed, the second half of 2024 saw a noticeable pick up in total housing transactions, which were up 14% compared with the same period in 2023.
“However, taking 2024 as a whole, transactions were still modestly (6%) lower than the levels prevailing before the pandemic struck in 2019.”
There have been reports from lenders recently showing first-time buyer activity has increased, and Nationwide’s data endorses this.
It said mortgage completions by those taking their first step onto the property ladder in 2024 were just 5% below 2019 levels.
Gardner said: “This represents a solid performance, given the interest rate environment – for example, five-year fixed mortgage rates are currently around 4.4% (for borrowers with a 25% deposit) compared to c2% in 2019.”
He added: “Looking ahead, the changes to stamp duty at the start of April are likely to generate volatility in transactions in the near term, as buyers bring forward their purchases to avoid the additional tax.
“This will likely lead to a jump in transactions in March, and a corresponding period of weakness in the following months, as occurred in the wake of previous stamp duty changes.”
Indeed, on 1 April the thresholds at which stamp duty is charged will decrease meaning more buyers will be faced with tax when buying their home. This will have the biggest impact first-time buyers in areas with higher house prices and those moving home.
As such, experts believe the current house price positivity may flounder.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the wealth manager, said: “While property prices are expected to remain resilient in the first quarter, partly a reflection of base rate cuts and the stamp duty deadline, it will be interesting to see whether that momentum continues beyond April when the property tax thresholds revert back to their previous, lower levels.
“Affordability levels may be improving, albeit very slightly, but they remain severely stretched by historical standards.
“Mix that in with property tax increases, rising living costs from April when household bills jump up once again, job uncertainty and the potential for wage growth to slow and some sellers may be compelled to adjust asking prices downwards to secure a sale.”
