House prices ease as end of stamp duty holiday nears
By Abigail Townsend
Date: Tuesday 02 Feb 2021
(Sharecast News) - UK house price growth has started to slow ahead of the stamp duty holiday coming to an end, industry research showed on Tuesday.
The latest Nationwide house price index showed annual house price growth was 6.4% in January, down from 7.3% in December. Month-on-month, house prices fell 0.3% on a seasonally-adjusted basis, the first monthly decline since June.
The average house price now stands at £229,748, compared to £230,920 in December.
Nationwide attributed the slowdown to demand starting to ease ahead of the stamp duty holiday coming to an end on 31 March 2021.
The UK housing market ground to a halt in early 2020 because of the first lockdown. Since then, however, it has boomed, fuelled by pent-up demand and the stamp duty holiday.
Robert Gardner, Nationwide's chief economist, said: "The typical relationship between the housing market and broader economic trends has broken down over the past nine months. This is because many peoples' housing needs have changed as a direct result of the pandemic, with many opting to move to less densely population locations or property types, despite the sharp economic slowdown and uncertain outlook.
"House price growth ended 2020 at a six-year high, even though the economy was probably around 10% smaller than at the start of 2020, with the unemployment rate around a percentage point higher."
Looking ahead, Gardner added: "Shifts in housing preferences are likely to continue to provide some support for the market.
"However, if the stamp duty holiday ends as scheduled, and labour market conditions continue to weaken as most analysts expect, housing market activity is likely to slow, perhaps sharply, in the coming months."
On Monday, Bank of England data showed that mortgage approvals fell in December, but remained above expectations, sending the total for 2020 to the highest since the financial crisis.
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