Prices of houses DECLINED in April, due to the rise in stamp duty duty creating a sluggish market.
House prices took a hit in April as the increased stamp duty put a damper on the property market, according to Nationwide Building Society's data. With prices falling 0.6% in the month, the average home now costs £270,752, down from £271,316 in February. The annual house price growth slowed to 3.4% in the year to April, down from 3.9% in the year to March.
The dip in demand was predictable, given the changes to stamp duty at the start of the month, as buyers rushed to close deals before the increased tax obligations kicked in. The market is expected to remain somewhat sluggish in the coming months, following the typical pattern observed after stamp duty holidays.
Until 1 April, first-time buyers were exempt from stamp duty on homes up to £425,000. However, that threshold dropped to £300,000 this year, meaning that many buyers now face higher taxes. For instance, a purchase worth £425,000 would have resulted in no stamp duty before, but now costs £6,205.
Beyond the stamp duty impact, there has also been a glut of homes on the market, contributing to falling prices. In the four weeks to 20 April, there were 12% more homes for sale than the previous year, with the average estate agent branch carrying 34 homes, compared to just 15 in 2022 during the pandemic boom. This abundance of homes creates a perfect environment for buyers who are now enjoying both abundant choice and considerable negotiating power, keeping prices flat or even nudging them downward.
However, sellers seem to be more motivated than hesitant buyers, with an observed increase in homes being listed for sale in April compared to the previous year. The market's future trajectory is uncertain, as some industry experts believe interest rate cuts could stimulate the market, while others see risks such as renewed inflationary pressures and changes in tax policies as potential obstacles.
Relevant Enrichment Data:
- The immediate impact of the stamp duty changes resulted in a monthly drop in house price growth of 0.6% in April 2025. This follows the 0.5% drop in March 2025, which was caused by buyer caution before the changes.
- Since the stamp duty changes, the market has shown signs of slowing down, with average house prices stagnating. This trend is expected to continue for the next six months.
- Scotland and Northern Ireland are showing relative resilience in the face of the stamp duty changes, while England is experiencing more significant declines.
- The changes in the stamp duty thresholds have significantly increased the tax burden on buyers. For a £350,000 property under the new rules, the stamp duty amounts to £25,000, compared to less than £5,000 under the previous rules.
- For first-time buyers, the tax-free threshold for stamp duty was reduced to £300,000 this year, compared to £625,000 before. This means that many first-time buyers now have to pay stamp duty on properties worth up to £300,000.
- The April drop in house prices, as reported by Nationwide Building Society, is attributed to the increased stamp duty impacts, leading to a 0.6% decrease, making the average home cost £270,752.
- The dip in demand following the stamp duty changes was predictable, with the market generally slowing down in the months after holidays.
- Stamp duty-related pressures have contributed to the market's current sluggishness, as many buyers now face higher taxes, such as the £6,205 paid on a £425,000 purchase.
- The glut of homes on the market, with 12% more homes for sale compared to last year, is creating a buyer's market, keeping prices stagnant or even causing them to decrease.
- Sellers appear to be more proactive, listing more homes for sale in April compared to the previous year, due in part to uncertainty surrounding the housing-market's future trajectory.
- The housing market's future remains uncertain, with experts divided on whether interest rate cuts will stimulate growth or if renewed inflationary pressures and changes in tax policies will serve as obstacles, especially within England, where significant declines have been observed.
