House prices edge up as buyer choice hits 10-year high
We’re fast approaching the Spring selling season, which is one of the busiest periods of the year for the housing market. People emerge from winter hibernation mode to start their search for a new home, as well as lots more people listing their homes for sale.
The average price of property coming to market has risen by 0.5% (+£1,805) this month to £367,994, which is lower than the 0.8% increase we usually see at this time of year. You can read more about what’s happening with house prices in your local area in our monthly House Price Index.
What happened to house prices this month?
This more modest monthly price rise looks to be driven by two key factors. First, sellers are being mindful of the upcoming stamp duty changes in England at the end of March, which could see more buyers pushed into a different threshold for the amount they pay stamp duty on. Secondly, there’s now more choice for buyers than we’ve seen in a decade, which means sellers need to price more competitively to set their homes apart, and attract interest.
The number of available homes for sale has hit a 10-year high, helping to moderate the usual new year price surge. This increased choice is good news for buyers, but means sellers need to be realistic when setting their asking price. First-time buyer properties actually saw a small monthly decrease of 0.1% in average asking prices, while larger ‘top-of-the-ladder’ homes saw a 0.6% increase.
What do the stamp duty changes mean for home-movers?
The impact of the stamp duty changes varies significantly depending on house price, and whether you’re a first-time buyer. First-time buyers purchasing homes between £500,001 and £625,000 face the biggest potential impact, with an extra £11,250 added to their moving costs if they miss the end of March deadline.
There are currently more than 550,000 homes sold awaiting legal completion – 25% more than at this time last year. This has led to concerns about a potential conveyancing ‘log jam’ as buyers rush to complete before the deadline. Particularly in London, where there are 28% more first-time buyers currently going through the home-buying process compared to last year.
The average time to complete a property transaction remains around five months, meaning many buyers have been working against the clock since November to meet the deadline. We’re hearing from estate agents that while some buyers may need to pull out of their transactions if they miss the deadline, many are proceeding with their purchases regardless, having factored in the potential additional costs.
What do the experts think?
With the spring selling season approaching and significant policy changes on the horizon, market experts are closely watching both seller behaviour and the broader economic outlook. While activity levels remain encouraging, there are calls for government intervention to help those caught in the completion rush.
Our property expert, Colleen Babcock, notes that sellers are adapting to market conditions. “New sellers are showing some pricing restraint after a fast start to the year, being mindful of both the high level of seller competition and the looming stamp duty deadline,” she says. “With the predicted conveyancing log-jam likely to cause some buyers to miss the deadline through no fault of their own, it would seem justifiable for the government to announce a short extension.”
On the mortgage front, there’s growing optimism about the direction of mortgage rates. Our mortgage expert, Matt Smith, points to this month’s 0.25% cut to the Base Rate this month, and what this could mean for mortgage rates in the longer term: “We’ve now had the first Bank Rate cut of the year, with potentially two or three more cuts to come. While we’re unlikely to see major falls across the board, we’ve already seen the first sub-4% rates of 2025.”
What else has happened this month?
Even though we’ve seen muted house price growth this month, market activity remains strong, with lots more activity than we were seeing during the same period last year. The number of new sellers coming to market is now 13% ahead of last year, buyer demand is up 8%, and sales agreed numbers have increased by 15%. January was also a record month for Mortgage in Principle applications on Rightmove, with 49% more applications being made than in January 2024.
Looking ahead, while some uncertainty remains around interest rates and stamp duty changes, underlying market activity remains positive, with no major drop-off expected after April’s deadline. The combination of increasing buyer choice, steady mortgage rates and strong demand may nudge many buyers and sellers into getting started with a home move in 2025.
The header image for this article was provided courtesy of Inigo, London
