UK house prices reach record high driven by looming tax deadline
Published on 07/02/2025
UK house prices surged in January, as buyers rushed to snap up properties ahead of the stamp duty increases being implemented from 1 April 2025 onwards.
The January UK Halifax House Price Index was released on Friday, with the average property price surging to a new record high of £299,138 (€358,822) last month.
House prices inched up 0.7% in January, compared to a fall of 0.2% in December. On an annual basis, prices rose 3% in January 2025, compared to 3.4% in the same month last year.
This was mainly driven by more buyers trying to complete house purchases ahead of the planned stamp duty increases coming into effect in April. From 1 April this year, the temporary threshold increases to Stamp Duty Land Tax (SDLT) will end. This is expected to have the greatest impact on first-time home buyers.
At the moment, first-time buyers do not pay any stamp duty while buying homes worth £425,000 (€509,796). However, this threshold is set to decrease to £300,000 (€359,856) from April onwards.
Northern Ireland still experienced the strongest house price increase on an annual basis, with house prices rising 5.9% in January, although prices slowed from December’s 7.3%. The average house in Northern Ireland set buyers back by approximately £205,473 (€246,469) in January.
In Wales, house prices inched up 3.6% on an annual basis in January, with buyers having to pay about £227,397 (€272,767.3), on average, for a property.
In January, Scotland saw a softer rise in house prices, compared to other parts of the UK, at 2.4% on an annual basis. The average Scottish property was priced at about £210,690 (€252,726.8) last month.
Coming to England, property prices in the North East were higher than the North West in January on an annual basis, seeing a rise of 5.2%, with the average property price coming up to £178,696 (€214,349.4). London remained the most expensive city for house prices in the UK, with the average property costing about £548,288 (€657,682.4), which was a rise of 2.8% on an annual basis.
Struggles with affordability
Amanda Bryden, head of mortgages at Halifax, said in the January report: "Affordability is still a challenge for many would-be buyers, but the market's resilience is noteworthy. There’s strong demand for new mortgages and growth in lending. With a stamp duty increase looming, some of this demand may have come from first-time buyers eager to complete transactions before the end of March.
"Despite geopolitical uncertainties, and waning consumer confidence, other key indicators look fairly positive for the housing market. The Bank of England has made its first base rate cut of the year, and there are probably more to come. Household earnings are expected to continue outpacing inflation – albeit that gap may narrow – easing some of the financial pressure still being felt from the cost-of living squeeze.
"As things stand, mortgage rates are likely to hover between 4% and 5% in 2025, influenced by both global financial markets and domestic monetary policy. Over the past year, buyers have been getting used to this new normal, understanding that rates are unlikely to return to the historical lows of 1%.”