UK house prices dipped for the second month running in February as the sector’s mini-boom appeared to peter out, Halifax said.
The average price of a property fell 0.1% to £251,967, the bank said. The drop followed a 0.3% decline in January that marked an end to a surge in prices spurred by Chancellor Rishi Sunak’s stamp duty holiday.
February’s decline meant house prices were 5.2% higher than a year earlier after the temporary scrapping of stamp duty on the first £500,000 of a purchase triggered a frenzy of buying to beat the original deadline of 31 March.
With a backlog of transactions struggling to complete by the end of March, Sunak extended the tax break until the end of June in his budget on Wednesday. After that date the first £250,000 of a house purchase will be exempt from stamp duty before reverting back to the previous £125,000 threshold at the start of October.
Estate agents were busy after the budget as some potential buyers sought to take advantage of the longer deadline. Sunak also announced a government mortgage guarantee scheme to help first-time buyers with small deposits.
Russell Galley, Halifax’s managing director, said: “The government’s decision to extend the stamp duty holiday – one of the main drivers of demand from homemovers during the pandemic – has removed a great deal of uncertainty for buyers with transactions yet to complete.”
Galley said the performance of the housing market was linked tightly to the state of the wider economy with joblessness set to rise even as the economy recovers. The pace of the recovery is uncertain and will depend largely on the success of the government’s vaccine programme, he said.
“Though there is the likelihood of an economic bounceback from lockdown, with households not unduly impacted by the pandemic deploying the significant reserves of savings that they have built up, higher unemployment is likely to limit new buyer demand,” Galley said. “Therefore, we would not expect the level of growth seen in house prices over the past year to be sustained throughout 2021.”