House prices continue their steady upward climb

House prices continued to rise in March as easing affordability pressures – alongside the end of the stamp duty holiday – boosted demand.

UK house price growth remained stable in March at 3.9 per cent, the same as in February, according to Nationwide’s house price index.

“These price trends are unsurprising, given the end of the stamp duty holiday at the end of March,” Nationwide’s chief economist Robert Gardner said.

The stamp duty holiday has now officially ended, with first-time buyers no longer able to get a discount on the tax paid on their purchase.

“The market is likely to remain a little soft in the coming months since activity will have been brought forward to avoid the additional tax obligations – a pattern typically observed in the wake of the end of stamp duty holidays”, Gardner added.

Houses in Northern Ireland increased by 13.5 per cent in the year to March, the fastest rate in the UK, Nationwide said.

The increase in London property was just 1.9 per cent, making it the slowest-growing region.

London’s huge rise in house prices over the last two decades mean the affordability pressures in the capital are much higher than elsewhere, putting a ceiling on house price growth.

But with mortgage rates still high and the cost-of-living crisis not quite in the rearview mirror, affordability is an “ongoing concern” across the entire country, president of Onthemarket Jason Tebb said.

“With the markets expecting further rate reductions this year, this should give buyers who require mortgages increased confidence about taking the plunge,” he added.

Gardner agreed that activity is likely to pick up as the summer progresses.

“The unemployment rate is low, earnings are rising at a healthy pace in real terms, household balance sheets are strong and borrowing costs are likely to moderate a little if Bank Rate is lowered further in the coming quarters as we and most other analysts expect,” he said.

Estate agents Savills have predicted that transactions will “steadily improve” during the year, but “recovery will not be uniform”.

The company said activity in the first half of the year is likely to be driven by needs-based buyers, while “second steppers will gradually return as rates drop further”.