Homeowners should expect house prices to jump at the start of 2025 in response to the upcoming stamp duty changes.
Mortgage lender Nationwide has predicted there will be a leap in the number of transactions in the first three months of the year as buyers rush to complete on property purchases before the tax thresholds increase.
Currently first-time buyers are exempt from stamp duty on up to £425,000 of their property’s price. But this will end on 31 March 2025, when the nil rate will only apply to the first £300,000 for those buying their first home. The stamp duty nil rate threshold will also reduce for all other buyers from £250,000 to £125,000.
The hurry to purchase homes before the stamp duty thresholds fall at the end of March is expected to inflate property prices at the start of the year. But after this, there will be a period of rebalancing.
Over the year Nationwide predicts house prices will rise by 2% to 4%.
Robert Gardner, chief economist at Nationwide, said: “Upcoming changes to stamp duty are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax.
“This will lead to a jump in transactions in the first three months of 2025 (especially in March) and a corresponding period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes.
“This will make it more difficult to discern the underlying strength of the market.
“But, providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth, where the latter is likely to remain broadly in the 2% to 4% range in 2025.”
Estate agents have made similar predictions with Chestertons forecasting a 3.4% increase in property prices across the UK and a 3% rise in London.
Meanwhile, a survey of agents at Jackson-Stops found a third thought property prices would hold in 2024, while a further third expected an increase of between 2% and 4%.
