House prices hit record high ahead of stamp duty changes according to UK’s biggest lender
HOUSE prices hit another record high as prospective homeowners look to buy ahead of stamp duty changes next year.
The average house price was £298,083 in November, according to the UK’s biggest mortgage lender Halifax.
That’s a new record high, after they peaked at £293,999 in October.
Alice Haine, personal finance analyst at Bestinvest, said “momentum returned to the market” as buyers looked to seal a deal before stamp duty changes coming next year.
Currently, buyers only pay stamp duty on properties costing more than £250,000 and first-time buyers only pay the land tax on properties worth £425,000 or more.
But these thresholds will fall to £125,000 and £300,000 respectively from April 1, 2025.
Alice said: “While this (the stamp duty changes) will have an impact on all residential home buyers, it will deliver a particularly heavy blow to first-time buyers, the next generation of property purchasers, who will not only need to raise enough money for a deposit but also enough to cover the higher tax bill.
“It means property prices are likely to rise in the run-up to the deadline as buyers and sellers race to beat the tax hike.”
Halifax said UK house prices went up 4.8% annually in November and for the fifth month in a row, up 1.3% from October.
Prices continue to increase the most in Northern Ireland, rising 6.8% annually and with the average house there now costing £203,131.
Property prices in Wales also showed high growth, spiking 4.1% annually and with the average home worth £225,084.
London retained the top spot for the highest average house price in the UK, at £545,439 in November, up 3.5% compared to last year.
What is happening to house prices?
House prices have steadily been increasing in recent months following Bank of England base rate cuts.
In the BoE’s most recent Monetary Policy Committee (MPC) meeting, rate-setters reduced the base rate from 5% to 4.75%.
The base rate is used by lenders to determine the interest rates offered to customers on savings and borrowing costs including mortgages.
Any reductions mean mortgage holders see their bills fall and are also good news for new buyers.
But this can increase demand for houses and push up prices.
Amanda Bryden, head of mortgages at Halifax, said: “Latest figures continue to show improving levels of demand for mortgages, as an easing in mortgage rates boost buyer confidence.
“However, despite these positive trends, many potential buyers and movers still face significant affordability challenges and buyer confidence may be tested against a changeable economic backdrop.”
Whether house prices will continue to rise depends on a multitude of factors.
The BoE’s governor Andrew Bailey said this week there could be as many as four interest rat cuts in 2025 which would see them increase.
However, Alice Haine, from Bestinvest, said prices are unlikely to rise as quickly in 2025 as they have in recent months.
She explained: “Beyond the start of April, the market is likely to be more muted as buyers choose to purchase cheaper homes to reduce their tax bill or negotiate more aggressively to afford their desired property.
“There is also the sting in the tail for second homeowners and buy-to-let landlords who are already contending with the hike in the property tax on second property purchases, which came into effect immediately.”
Who else tracks house prices?
Halifax is part of Lloyds Group, which is the UK’s biggest mortgage lender.
Its monthly house price index is based on the mortgage data it holds and has been going since 1983.
It’s one of several key barometers of the property market.
The official measure of house prices is from the Office for National Statistics, which uses data from the Land Registry where the actual sold price is recorded.
This is the most accurate of all the indices, but the figures come out three months after the homes are sold, so there’s a big time lag.
Halifax and Nationwide each publish a monthly index tracking the average prices of homes on which they provide mortgages.
While they do adjust their figures to iron out big outliers, both lenders measure average house prices based on the properties they see.
As it’s based on mortgage approvals, this doesn’t include “cash buyers” who buy without needing a mortgage.
Rightmove also publishes monthly house price data.
Its data is based on asking prices from the property listings on its website.
The property website doesn’t consider the price a property sold for, like the ONS Land Registry, which could end up being higher or lower – and some might not even sell at all.
How to get the best deal on your mortgage
IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.