UK house price growth slows as end of stamp duty holidays nears.
On Friday, the imminent suspension of the stamp tax exemption cools the market to 0.1% growth in September.
UK house price growth slowed in September as economists said the impending end of the stamp tax exemption had cooled the market after a period of extraordinary change.
According to Nationwide, the average price grew just 0.1% over the month to £ 248,742, a sharp slowdown compared to 2% growth in August.
The UK’s largest construction company said annual house price growth fell to 10%, down 11% in August. That was less than the yearly growth of more than 13% in June, the fastest since the real estate boom in 2004.
Median home prices on Nationwide’s measure are about 13% higher than before the pandemic began in early 2020. During Covid’s initial shutdowns, the market closed completely but rebounded after they raised restrictions, as some households found that they had increased savings along with many cases wanting more space.
Price growth also accelerated with the introduction and repeated extension of a property tax cut from the stamp duty, introduced by Chancellor Rishi Sunak in July 2020 to support the housing market.
The threshold at which stamp duty will be paid in England and Northern Ireland will drop from £ 250,000 to £ 125,000 on Friday, eventually bringing it back to the pre-pandemic level after repeated and controversial extensions. The decentralized administrations of Scotland and Wales ended equivalent tax relief earlier this year.
Nationwide data shows the “beginning of a period of relatively restricted growth in house prices” as the effect of the stamp tax wears off, said Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, a consultancy.
Along with the increased stamp duty, Dickens added that the impact of rising inflation on real disposable income could also further affect growth in house prices.
However, many economists believe that prices are likely to hold in the coming year due to low-interest rates and supply constraints due to the lack of new home construction.
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