Lower stamp duty thresholds introduced at the start of the month are being widely blamed for the biggest monthly decline in UK house price growth since August 2023, according to a major lender’s measure.
Nationwide’s latest report on the housing market showed a 0.6% decline in April, taking the rolling annual rate of growth down to 3.4% from the 3.9% determined in March.
The bigger than expected decline has been widely explained by a slowdown in activity prompted by the stamp duty changes, which affected buyers in England and Northern Ireland at the beginning of the month.
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They had the greatest effect in England, where the changes included first-time buyers paying stamp duty on property costing £300,000 – up from £450,000 – while the surcharge for second homes also increased, by two percentage points, to 5%.
There was a rush to complete sales in March ahead of the deadline, which is also likely to have influenced prices.
But Nationwide said that April marked the first decline, in its measure, since August last year.
The lender’s chief economist, Robert Gardner, said: “The softening in house price growth was to be expected, given the changes to stamp duty at the start of the month. Early indications suggest there was a significant jump in transactions in March, with buyers bringing forward their purchases to avoid additional tax obligations.
“The market is likely to remain a little soft in the coming months, following the pattern typically observed following the end of stamp duty holidays. Nevertheless, activity is likely to pick up steadily as summer progresses, despite wider economic uncertainties in the global economy, since underlying conditions for potential home buyers in the UK remain supportive.”
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He pointed to the pace of wage growth continuing to outstrip inflation, coupled with low unemployment and retreating mortgage rates.
Rising expectations for a Bank of England interest rate cut next week, with a growing potential for more in the months ahead, are also forecast to bolster activity.
Prices have historically been supported by weak availability but estate agents have reported growth in seller listings as spring has got under way.
