Nationwide warns stamp duty changes could rush transactions
According to Nationwide, changes to stamp duty rules in the budget could cause a rush in transactions early next year. The growth in house prices in the country unexpectedly slowed last month, it said.
The building society’s monthly index revealed that annual house prices were growing at a rate of 2.4% in October. This is a slowdown from the high of 3.2% seen in September. It was still the highest rate of annual growth seen in the country since December 2022 but was still below the rate predicted by economists who expected a 2.8% increase for the month.
In October, the average house in the UK cost £265,738, 0.1% more than September.
Nationwide’s chief economists Robert Gardner said market activity is still resilient and mortgage approval levels are approaching pre-pandemic levels, despite higher interest rates. Interests rates will likely be cut by the Bank of England from 5 to 4.75%.
Some banks have already begun to cut mortgage interest rates. The Guardian reported that Santander has reduced all rates by 0.36% while Clydesdale cut some products by 0.2%. Others however have increased rates including Virgin which raised its rates by 0.15%.
The Office of Budget Responsibility said that it expects a rise in interest rates from around 3.7% in 2024 to a peak of 4.5%. This came from its economic outlook which was published alongside the budget.
The chancellor’s decision to remove the temporary increase for stamp duty could spark a rush to finish a purchase before the changes are made, Gardener warned.
“The main impact of the stamp duty changes is likely to be on the timing of property transactions, as purchasers aim to ensure their house purchases complete before the tax change takes effect,” Gardner said. “This will lead to a jump in transactions in the first three months of 2025 (especially March), and a corresponding period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes.”
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