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Housing Market Anticipated to Decelerate Following Peak Price Surge in Two Years
The property market is predicted to experience a slowdown after recording its most significant price increase in two years. According to data from the Office for National Statistics, the typical home value reached £269,000 in January, marking a 4.9 percent rise compared to the previous year. This represented the largest surge since January 2023, driven by reduced interest rates and an anticipated adjustment to stamp duty, which collectively stimulated buyer demand in the housing market.
Changes to Stamp Duty Thresholds
Currently, homebuyers in England do not incur stamp duty on the initial £250,000 of a property’s value. First-time purchasers benefit from an even higher allowance, up to £425,000. However, impending tax adjustments are set to alter this landscape. Under the proposed changes, effective from April 1, stamp duty will be levied on properties valued at £125,000 and above. Furthermore, the first-time buyer relief threshold will be reduced to £300,000, impacting affordability for new entrants to the housing market.
OBR Forecasts Market Cooling
The Office for Budget Responsibility (OBR) has indicated that the housing market is expected to moderate its growth due to the persistent effect of elevated interest rates. These rates are anticipated to curb demand, leading to a cooling effect on property values.
Anticipated Price Growth Moderation
The OBR has projected a deceleration in the pace of house price increases, estimating growth to be around 2.8 percent for the current year, followed by 2.5 percent in 2026. This indicates a gradual easing of price inflation within the housing sector.
Regional Price Variations
Examining regional trends, the North East of England is experiencing the most rapid property value appreciation, with prices increasing by 9.1 percent. In contrast, London exhibits the slowest growth rate among regions, at 2.3 percent, highlighting geographical disparities within the national housing market.
Expert Analysis on Market Dynamics
Richard Donnell, a leading analyst at property portal Zoopla, commented on the evolving market conditions. “Zoopla’s recent data reveals a notable expansion in the supply of homes being listed for sale, with new listings outpacing sales. This supply increase, coupled with reduced first-time buyer activity and increased purchasing expenses for many buyers post-April stamp duty changes, suggests that house price growth is likely to diminish throughout 2025.”
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