Annual UK house price growth slowed for the first time in six months in January, as the stamp duty holiday deadline nears, according to Nationwide.
The building society said annual growth slowed modestly to 6.4% last month, from 7.3% in December.
Prices fell by 0.3% month-on-month, after taking account of seasonal effects – the first monthly decline since June. The average price in January stood at £229,748.
Housing demand soared in the second half of 2020, boosted by changing preferences due to the pandemic, with a number of people now seeking more outdoor space, or room for a home office, for example.
Buyers were also enticed by a stamp duty holiday which is due to finish at the end of March.
Robert Gardner, Nationwide's chief economist, said: “To a large extent, the slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.”
He added: “While the stamp duty holiday is not due to expire until the end of March, activity would be expected to weaken well before that, given that the purchase process typically takes several months (note that our house price index is based on data at the mortgage approval stage).”
Gardener expects shifts in housing preferences are likely to continue to provide some support for the market.
But he said if the stamp duty holiday ends as scheduled, and labour market conditions continue to weaken as most analysts expect, “housing market activity is likely to slow, perhaps sharply, in the coming months”.
A number of estate agents have called for the stamp duty holiday to be extended, to help people that are rushing to beat the deadline.
But Jeremy Leaf, north London estate agent and a former RICS residential chairman,said: “Those likely to miss out on the stamp duty saving due to backlogs tell us they would prefer to compromise on price rather than miss out on the property they have set their hearts on.”
Tom Bill, head of UK residential research at Knight Frank, said: “The initial wave of pent-up demand that began in May 2020 is now clearing through the system, accelerated by the end of the stamp duty holiday .”