Average house prices have soared to nearly £300,000 as buyers rush through purchases before Rachel Reeves’s punitive stamp duty hikes.
Prices grew by 0.7 per cent last month to a record £299,138 – a 3 per cent rise year-on-year – according to Halifax’s house price index.
Buyers have only two months until they will need to stump up potentially thousands of pounds extra in stamp duty as Labour enforces another tax hike.
They have been enjoying lower bills since autumn 2022, when the threshold at which stamp duty is payable was raised.
But this is set to drop in April after the Chancellor failed to extend the holiday in her first Budget. Stamp duty is not payable on the first £250,000 of a property, but this is being lowered to £125,000 in April. For first-time buyers, the threshold will be lowered from £425,000 to £300,000.
Guy Gittins, chief executive of estate agent Foxtons, said: ‘Market activity remains robust and it’s clear that the nation’s buyers and sellers are hitting the ground running this year.
‘This growth has been driven by a degree of added urgency from first-time buyers keen to complete ahead of April’s stamp duty deadline, as well as a greater degree of acceptance from homebuyers of the adjustment to interest rates over time.’
Although consumer confidence has been hit by stagnant growth figures, improved mortgage rates bolstered demand for homes in January. Homeowners have been facing sky-high mortgage rates since 2022 but borrowing costs have come down slightly.
Three cuts to the base rate in six months have prompted lenders to cut deals, which in turn has caused prospective buyers to act. Mortgage rates are set to fall further, brokers say, after a 0.25 percentage point cut to 4.5 per cent to the base rate on Thursday.
The Bank of England’s Monetary Policy Committee voted for the cut, with two members voting for a deeper 0.5 percentage point drop, to combat abysmal growth.
Amanda Bryden, head of mortgages at Halifax, said: ‘There’s strong demand for new mortgages and growth in lending.
‘With a stamp duty increase looming, some of this demand may have come from first-time buyers eager to complete transactions before the end of March.
‘As things stand, mortgage rates are likely to hover between 4 and 5 per cent in 2025, influenced by both global financial markets and domestic monetary policy.
‘Over the past year, buyers have been getting used to this new normal.’
Lenders repriced fixed deals downwards in the lead-up to the base-rate decision.
It will force the hand of other banks to slash rates and stir movement in the property market, brokers said.