Cheaper mortgages to support sales as house price growth slows
Lower demand and higher supply caused house price growth to slow in March, but analysts expect an improvement in affordability to boost prices in the coming months.
House price growth slowed to 1.6 per cent annually in March, down from 1.9 per cent at the end of 2024, according to Zoopla’s latest house price index.
“After an extraordinary March where many buyers and solicitors on their behalf were anxiously keen to secure their purchase prior to the Stamp Duty increases, the market has inevitably calmed somewhat in the North West,” Martin Fishwick, Senior Partner at Jordan Fishwick, one of the largest agents in the North West, said.
The end of the stamp duty holiday on March 31 led to a huge boost in the number of first-time buyers, with over 500,000 houses in the process of being sold in March.
The rush had been ongoing since the autumn Budget in October, with Santander reporting a 130 per cent increase in mortgage applications in the fourth quarter of 2024 compared to 2023.
Despite the expected post-stamp duty slowdown, Fishwick said there was still momentum from buyers due to the “significant rise in rents currently available and the more attractive mortgage rates on offer.”
Top UK lenders have recently been caught in an internal price war, with HSBC, Barclays and Lloyds all racing to attract customers.
In April, Barclays became the first FTSE-100 bank to drop rates below four per cent, reducing its two- and five-year fixed deals to 3.99 per cent.
Richard Donnell, Executive Director at Zoopla, said: “Revisions to how lenders are assessing mortgage affordability will unlock additional buying power and support sales volumes to help tackle the healthy stock of homes for sale.”
Donnell said the market was on track for a five per cent rise in sales in 2025, and that areas with “pragmatic pricing” are set to lead the growth.
“The housing market continues to see sellers listing their home for sale which is supporting continued growth… This reflects a group of determined movers who remain active despite a backdrop of economic uncertainty and shifting sentiment,” Donnell said.