House prices in the UK surged by 5.4% in the year leading up to February, marking the fastest growth rate in over two years, according to the Office for National Statistics (ONS). This acceleration in prices, from 4.8% in January, comes as buyers rush to complete their purchases before stamp duty discounts are reduced.
The February price data shows an increase across all regions of the UK, with England’s average house price reaching £292,000, up 5.3% from the previous year.
The rise has been especially pronounced in Northern Ireland, where prices rose by 9%, pushing the average to £183,000. Other parts of the UK also saw notable increases, with Scotland seeing a 5.7% jump, and Wales rising by 4.1%.
The Stamp Duty Deadline: A Catalyst for Higher House Prices
The significant rise in house prices is largely attributed to the anticipation of upcoming changes to the stamp duty system.
First-time buyers, who were previously exempt from stamp duty on homes costing up to £425,000, will now be required to pay the tax on properties over £300,000 starting in April. As a result, many buyers have expedited their purchases to avoid the new tax thresholds.
According to experts, this rush is likely to have driven the February price surge, with a particularly marked increase in home purchases in March. Data from Santander UK revealed that house purchases tripled in March compared to the same period the previous year, largely due to the looming stamp duty deadline.
Housing market activity appears to be peaking, with analysts expecting prices to remain elevated for at least the next couple of months.
Elliott Jordan-Doak, a senior economist at Pantheon Macroeconomics, noted that the stamp duty changes have “boosted” house prices but suggested that underlying strength remains in the market.
Despite economic challenges such as high borrowing costs and geopolitical uncertainty, house prices have shown resilience, demonstrating that the market remains buoyant.
Regional Disparities: North West Leads the Charge
There are significant regional variations in the UK housing market, with the North West of England experiencing the highest inflation at 8%, a stark contrast to London’s more modest 1.7% increase.
These differences in house price growth reflect a broader trend where housing affordability, local demand, and regional economic conditions are contributing to diverse housing price trajectories.
In particular, while London and the South East have seen slower growth, the North West and other parts of the UK have benefited from growing demand for more affordable housing options outside of London.
The disparity suggests that factors like local supply constraints, as well as the broader shift towards remote working, are playing key roles in shaping the market.
Jason Tebb, president of the property search portal OnTheMarket, pointed out that while housing affordability is still a challenge, lower mortgage rates—resulting from easing swap rates—could offer a much-needed boost to the market in the coming months.
