Published by Global Banking and Finance Review
Posted on February 7, 2025
By Suban Abdulla
LONDON (Reuters) -British house prices rose by more than expected last month as some buyers rushed to complete sales before an increase in property purchase taxes at the start of April, mortgage lender Halifax said on Friday.
House prices climbed by 0.7% in monthly terms last month after falling by 0.2% in December, Halifax said, above a 0.2% increase forecast by economists in a Reuters poll.
Prices increased by the most in nearly a year in the three months to January.
"There’s strong demand for new mortgages and growth in lending. With a stamp duty increase looming, some of this demand may have come from first-time buyers eager to complete transactions before the end of March," Amanda Bryden, Halifax's head of mortgages, said.
The expiry at the end of next month of temporary tax incentives for buyers of less expensive homes, as well as for first-time buyers, is expected to speed up some purchases.
"Early indicators of housing demand point to another month or two of decent performance for the housing market ahead of the stamp duty changes," Matt Swannell, chief economic advisor to the EY ITEM Club, said.
Other gauges of Britain's housing market have suggested a strengthening of demand in recent months. Figures from the Bank of England last week showed lenders in December approved the most mortgages for house purchases since September 2022.
The BoE cut interest rates on Thursday for the third time since August, as it halved its forecasts for economic growth in Britain this year. But it said it would take a gradual and careful approach to reducing borrowing costs further in the face of an expected spike in inflation in the coming months.
Friday's figures were in contrast to those of rival lender Nationwide's, which suggested the housing market lost some steam last month and rose at a slower monthly rate of 0.1%.
Bryden, at Halifax, said while the market remained resilient despite affordability challenges for many buyers, the lack of housing on the market was still an issue. Prime Minister Keir Starmer’s Labour government is trying to speed up the building of homes to address Britain’s housing shortages.
Halifax in December estimated house prices would rise by up to 3% this year.
Its measure of annual price growth slowed to 3.0% in January from a 3.4% rise in December, the slowest increase since July last year.
