UK house prices fall at fastest pace in four years after stamp duty rise

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UK house prices declined at their fastest monthly pace in nearly four years in April, as demand fell after the end of a temporary stamp duty holiday.

Property prices fell 2.8 per cent between March and April, the steepest month-on-month decline since July 2021, according to data from the Land Registry published on Wednesday.

The fall brought the average house price down to £265,000 and pushed annual growth to 3.5 per cent, from 7 per cent the previous month, the first slowdown since December 2023.

Aimee North, head of housing market indices at the Office for National Statistics, said: “UK annual house price inflation slowed in April, following changes to stamp duty land tax in England and Northern Ireland.”

Stamp duty thresholds reverted to pre-2022 levels on April 1, increasing costs for many property buyers. First-time buyers, for example, have started paying the levy for properties worth £300,000 or more, a lower threshold than the previous £425,000.

The South West registered the lowest annual house price rise, at only 0.9 per cent, following a sharp 3.8 per cent month-on-month contraction, taking the average cost of a home to £300,600.

The official figures suggest a larger drop in house prices between March and April than the 0.6 per cent decline reported by the lender Nationwide at the end of April.

Unlike Nationwide, official data includes mortgages from all providers and includes cash buyers.

Some economists believe the decline in house price growth is temporary.

Elliott Jordan-Doak, economist at the consultancy Pantheon Macroeconomics, said the trend was driven by “an unwind of activity brought forward” ahead of the tax change rather than “higher taxes hitting demand”.

“We expect the slowdown to be brief as the market normalises,” he added.

Separate Nationwide data reported house prices rising again in May, supported by still strong wage growth and mortgage rates declining from their peaks in the summer of 2023.

The ONS data also indicated a cooling in the rental market, but with pressures on renters as a whole likely to continue.

The average UK monthly private rents increased by 7 per cent to £1,339, in the 12 months to May, the fifth month of slowing annual rate and the lowest since April 2023.

Louisa Sedgwick, managing director of mortgages at Paragon Bank, said tenants will “undoubtedly welcome” the moderation of rents, but that these remained elevated after the record high seen last quarter.

“The supply of privately rented homes continues to be below the levels seen before the pandemic and substantially outstripped by demand, a dynamic that will see rents continue to rise above the rate of inflation,” she added.