Stamp duty changes lead to house price drop

Halifax reports that the average house price fell by 0.5% in March, which is the biggest decline in the last 12 months.  

The fall in house prices follows a rush to complete house purchases at the start of 2025 to beat the April stamp duty changes. House prices had increased in January as homebuyers looked to complete before the stamp duty changes came into effect and house prices then declined in February and March. 

From 1st April, two key stamp duty thresholds were reduced. The zero percent threshold dropped from £250,000 to £125,000. Meanwhile, the stamp duty threshold for first-time buyers reduced from £425,000 to £300,000.  

The race to beat the threshold reductions was the catalyst for higher house prices in January and the fall in February and March was expected. However, industry experts predict that house prices would continue to increase throughout 2025.  

Chief executive of Propertymark, Nathan Emerson commented “Hopefully this month-on-month dip is only temporary. The spring and summer months normally spur on a flurry in housing activity, especially at a time when there are many competitive mortgage deals out there right now as a result of the reduction in interest rates last year.” 

Despite the dip in mortgage rates, property experts are keeping a watchful eye on the impact that Donald Trump’s global tariffs may have on the UK property market. 

While there are some worries that tariffs could result in would-be homebuyers being more cautious, some financial specialists are forecasting a positive impact. FT Adviser recently reported that the tariffs “may single-handedly rescue the UK housing market”. 

This is Money reported that mortgage rates have started to fall after the tariff announcements, with an expectation of three further interest rate cuts by the end of 2025 due to a sharp fall in SONIA swap rates. 

Mortgage brokers are expecting more lenders to make interest rate cuts.  

Paul Mugleston, managing director at Online Mortgage Adviser stated “With SONIA swaps continuing to slide, we’re getting closer to seeing two and three-year fixed rates starting below 4 per cent.  

If the current trends hold, it wouldn’t be surprising to see lenders break that barrier in the coming weeks.”