The average house price stood at £367,994 in February, a rise of 1.4% year-on-year but only up 0.5% month-on-month.
According to the latest Rightmove House Price Index, this is a “muted price rise” for this time of year and was attributed to new sellers lowering price expectations due to the “looming stamp duty deadline and high competition”.
The long-term average price increase for this time of year is 0.8%.
The report found that the number of available homes for sale is at a 10-year high, which Rightmove said lowers “sellers’ pricing power”.
The firm said the changes to stamp duty will impact some areas and customer groups more than others, noting that first-time buyers in lower-priced areas will not be impacted by the changes as there is still good availability of stamp duty-free properties.
First-time buyers looking for properties between £500,001 and £625,000 will need to stump up an extra £11,250 in costs if they miss the deadline.
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Rightmove said it expects a “conveyancing logjam” as movers rush to complete in time and is calling for a “speedier transaction process”.
It welcomed the government’s latest announcement that it would “modernise and digitise the system”, with the current average completion time estimated at around five months.
The report found that there were currently more than 550,000 homes going through the completion process, which is 25% higher than this time last year.
It stated that London would likely see the “biggest logjam” of first-time buyers, with 28% more first-time buyers in the capital going through the completion process than this time last year. This is the highest increase of any region.
Mortgages in principle applied for on Rightmove rose 49% in January year-on-year, showing “building momentum”, but the company warned that global and economic news could dampen activity and impact sentiment.
It noted that mortgage rates were still high but are hopefully on a “sustained downward trajectory”, following the base rate cut.
Colleen Babcock, property expert at Rightmove, said: “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 in England also of the looming stamp duty deadline and extra costs for some buyers.
“Agents report that some of the steam is coming out of new sellers’ price expectations to fit the changing market conditions, which is a sensible reaction to attract buyer interest, and it will also help to support activity levels.”
She said the stamp duty deadline in England was a “key talking point” and reiterated that while some movers may not be affected at all, others will be “more severely impacted”.
“We’ve previously suggested reforms such as regional variations in stamp duty charges to try and address some of the inequities in the current system. With the predicted conveyancing logjam likely to cause some buyers to miss the deadline and end up paying more tax through no fault of their own, it would seem justifiable for the government to announce a short extension before the end of March,” Babcock added.
She noted that for those in higher-priced areas like London, the additional stamp duty charges they face can be “significant and difficult to afford when already stretched to the max”.
“The lengthy and frustrating completion process means that the average mover has had to have one eye on the clock since November to ensure that they complete before the stamp duty deadline. Beyond the deadline, agents report that underlying market activity remains positive, and that they don’t expect a major drop-off in activity from April, as the financial impact on many movers is smaller than previous deadlines,” Babcock said.
‘Confident start’ to 2025 continues but post-stamp duty uncertainty remains
Tomer Aboody, director of specialist lender MT Finance, said the “confident start to 2025 continues”, with more sellers coming to market and good levels of activity.
He continued: “Increased choice ultimately results in lower property prices as the market shifts in the buyer’s favour.
“With the stamp duty changes looming, a big push in the first quarter is likely, with uncertainty potentially creeping in after that. Banks are already reducing mortgage rates in order to entice buyers, which will help maintain confidence, and a further rate cut from the Bank of England would definitely assist on that front.”
Sara Palmer, distribution director at The Mortgage Lender (TML), said February had been a “slightly more subdued property market from January”, but a rise in listings and motivated buyers have kept house prices on an “upward trajectory”.
“The property market has continued to be boosted by the stamp duty changes in the Autumn Budget as first-time buyers rush to complete transactions before the deadline at the start of April.
“The latest interest rate decision has also encouraged some hesitant buyers into making their moves sooner rather than later. Buyers and sellers will be hopeful that activity levels will stay strong in the coming months. Those in the position to buy will likely want to press ahead as lenders reduce rates, while those whose plans are further out would benefit from speaking to a mortgage broker, so they are fully prepared once they are ready to buy,” she explained.
