UK house prices dipped in February, despite expectations of a pre-April rush before stamp duty changes take effect.
According to Halifax, the average property price fell by 0.1% to £298,602 after reaching a record high in January. Annual growth slowed to 2.9%, below the predicted 3.1%.
Many had anticipated stronger demand as buyers looked to complete purchases before tax thresholds are lowered. From April, first-time buyers in England and Northern Ireland will pay stamp duty on homes worth more than £300,000, down from £425,000, while the general tax-free threshold will drop from £250,000 to £125,000.
Despite this, falling house prices suggest wider economic concerns may be affecting buyer confidence. While mortgage rates have eased following the Bank of England’s cut to 4.5%, affordability remains an issue. HSBC recently lowered its standard variable rate to 6.74%, the lowest in two years, but borrowing costs are still relatively high.
The shifting market conditions have increased interest in bridging finance, which helps buyers secure properties quickly while awaiting mortgage approval or a sale. The upcoming stamp duty changes have encouraged some to use short-term loans to complete purchases before tax thresholds tighten.
Falling house prices could also lead to more chain breaks, where buyers struggle to sell their existing home in time. Bridging loans provide a temporary solution, allowing buyers to move forward while waiting for their sale to complete. However, if prices continue to decline, lenders may tighten borrowing criteria or raise rates to offset potential risks, so it’s important to act fast.
Northern Ireland recorded the strongest house price growth in the UK at 5.9%, followed by Scotland at 3.8%. Wales saw a 2.8% rise, while Yorkshire and Humberside led England with 4.1% growth.
Although prices have fallen in two of the past six months, demand remains strong. Limited housing supply is likely to support prices, but economic uncertainty may lead to slower growth. For buyers considering bridging finance, careful planning is essential as lenders adjust to changing market conditions.