Yahoo Finance UK house prices decline fall in February but property value remains high
UK house prices were 0.1% lower in February compared to January, continuing a muted start to the year.
Data from lender Halifax showed that the average UK house price is now £251,697 ($349,000).
Meanwhile, annual house prices increased 5.2% in February, compared to the same time period last year when February was the last full month before lockdown.
House prices were 0.5% higher in the last quarter (December to February) compared to the preceding three months (September to November).
According to figures from HMRC, UK seasonally adjusted residential transactions in January 2021 were 121,640, this was 2.4% lower than December — down 25.2% on a non-seasonally adjusted basis.
Quarterly transactions between November last year and January 2021 were approximately 27.2% higher than the preceding three months (August-October 2020). Year-on-year transactions were up 22.9% compared to January 2020 (19.3% higher on a non-seasonally adjusted basis).
The coronavirus pandemic and chancellor Rishi Sunak's announcement to extend the stamp duty holiday to 30 June is likely to pent up demand in the coming months, according to Halifax.
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Russell Galley, managing director at Halifax, 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."
“The new mortgage guarantee scheme is another welcome development from this week’s Budget. Whilst mortgage approvals have reached record highs in recent months, hitting levels not seen since before the financial crisis of 2008, raising a deposit continues to be the single biggest hurdle for first-time buyers to overcome," he added.
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The performance of the housing sector "remains inextricably linked" to the health of the wider economy, in the longer term. "The pace and extent of recovery are still highly uncertain, and much will depend on the ongoing success of the UK’s vaccination roll out,"
Galley adds: “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. Therefore, we would not expect the level of growth seen in house prices over the past year to be sustained throughout 2021.”
It comes as Sunak announced an extension of the stamp duty holiday in England and Northern Ireland in his 2021 Budget, as well as unveiling new mortgages with just 5% deposits on Wednesday.
The threshold for stamp duty, a tax on property transactions in England and Northern Ireland, will remain at £500,000 ($698,558) until 30 June for residential purchases. It means buyers avoid the levy altogether on purchases under that amount. It will then only fall to £250,000 for another three months, before returning to its standard £125,000 rate.
A temporary holiday introduced last year had been due to expire on 31 March. The holiday on a similar land tax in Scotland and Wales is still due to expire soon, with the devolved administrations not expected to follow Sunak's lead.
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