As spring approaches, the UK property market continues on its upward trajectory, with high levels of activity from buyers and sellers pushing up house prices.
Buyers in the UK property market are benefiting from the highest level of choice at this time of year since 2015, according to the latest report from Rightmove.
Although these transactions will come under the new stamp duty thresholds set to take effect from 1st April, there are around half a million transactions set to go through after the deadline, indicating a market that is undeterred by tax changes thanks to strong demand for housing.
The report notes that asking prices have once again moved upwards, this time to 1.1% higher than last month to £371,870. The uptick represents sellers who are “pricing sensibly” for market conditions, and benefiting from keen buyer interest as a result.
While globally there is a level of political and economic uncertainty linked to the changing relationship between the world’s powerhouses, the UK property market has “remained stable and resilient”, says Rightmove, and current data indicates this is set to continue.
The number of sales agreed is now 9% up on what it was in March 2024, while new sellers coming to market is 8% ahead of where we were last year, when there was a greater level of trepidation in the UK property market.
What’s the mortgage outlook?
Mortgage rates have fallen since this time last year, although some analysts had forecast larger cuts by now, meaning affordability remains stretched – particularly in the higher-priced segments of the UK property market, and for first-time buyers who tend to rely more on higher loan-to-value (LTV) ratios.
The latest figures from Moneyfactscompare show that, as of 14th March, the average two-year fixed mortgage rate is 5.3497%. This compares with 2024’s average two-year fixed rate of 5.7935%.
The gap between two-year and five-year fixed rates is also closer than it has been for two years, as lenders compete for customers with better longer-term deals.
Matt Smith, mortgage expert at Rightmove, said: “We’re still seeing lenders price competitively where they can to secure mortgage business at this typically busy time of year. However, the economic turbulence happening globally is impacting mortgage rates, and we’re seeing some small rate fluctuations on a week-by-week basis.
“Most affected are rates for those with the smallest deposits, which is a double whammy for first-time buyers and those who need to borrow more.
“We’ve got the next interest rate decision coming up from the Bank of England, and the current expectation is that we’ll see a hold, followed by a cut in May. However, we’ve already seen this year how quickly things can change, so a lot will depend on other economic news we have between the two Bank of England meetings.”
Will UK property market be affected by stamp duty change?
From 1st April 2025, unless any changes are announced by the government, stamp duty charges will apply to a greater number of purchases in England. Zero rate thresholds for main residences will decrease from £250,000 to £125,000, while first-time buyers will see their thresholds fall from £425,000 to £300,000.
Rightmove’s figures show that there are around 575,000 transactions going through the legal completion process right now, some of which might not get across the line by April. Those that do complete in the next couple of weeks will enjoy a smaller tax bill.
The report notes that an estimated 74,000 moves (including 25,000 first-time buyers) are likely to miss the deadline.
However, Sarah Bush, Head of Residential Sales and Lettings at Cheffins points out that many buyers in the UK property market “seem to be fairly relaxed about the imminent stamp duty changes”, adding: “We don’t forecast this to have a major impact on activity in the market.”
Chris Rosindale, Chief Operating Officer at Connells Group, agrees: “The market is performing well, and the number of property exchanges we’re seeing is ahead of last year. Despite the upcoming changes to stamp duty, we haven’t seen any slowdown in buyers’ appetites to purchase a home, even now knowing that they won’t meet the deadline of 31st March.”
While Nathan Emerson, CEO of Propertymark, comments: “It is positive to see the housing market demonstrating ongoing resilience, especially as we continue to see wider economic uncertainty.
“As we approach the summer months, we hope to see a sustained momentum in overall growth; however, a lot will likely depend on if we see inflation fluctuate over the coming months and to the point at which the Bank of England may choose to use invasive action regarding base rates to keep inflation in check.”
Keep up to date with the latest UK property market news here.
