House price growth slows as stamp duty holiday nears end

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House price growth slowed for the first time in six months in January as the market approached the deadline for the stamp duty holiday on March 31.

Annual house price growth slowed to 6.4 per cent, from 7.3 per cent in December, according to the Nationwide house price index published this week (February 2).

The average property price in January stood at £229,748, down from £230,920 in the month before.

Robert Gardner, chief economist at Nationwide, described the deceleration as “modest”.

He said: “House prices fell by 0.3 per cent month-on-month, after taking account of seasonal effects – the first monthly decline since June. To a large extent, the slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.”

	Jan-21	Dec-20
Monthly Index (seasonally adjusted)	460.7	462
Monthly Change (seasonally adjusted)	-0.30%	0.90%
Annual Change	6.40%	7.30%
Average Price (not seasonally adjusted)	£229,748	£230,920

Mr Gardner also said that shifts in housing preferences were likely to provide some support for the market looking ahead. But he added that housing market activity was likely to slow and “perhaps sharply” in the coming months if the stamp duty holiday ends as scheduled, and labour market conditions continue to weaken.

Jeremy Leaf, principal at estate agency Jeremy Leaf & Co, commented: “The slowing of the pace of price rises is no surprise and is what we have been seeing on the high street since Christmas. Nevertheless, we expect a softening in prices and transaction numbers rather than a major correction. Most sales arranged are progressing to exchange of contracts without renegotiation, and movement restrictions only build up more pent-up demand, to say nothing of the shortage of listings, which only increase upward pressure on price. Those likely to miss out on the stamp duty saving due to backlogs tell us they would prefer to compromise on price rather than miss out on the property they have set their hearts on.”

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