Average UK house prices decreased 0.3% in January from a month earlier, the biggest monthly fall since April last year, according to Halifax.
The mortgage lender said average prices stood at £251,968 last month, although that is still 5.4% higher than a year earlier
The housing market was boosted in the second half of 2020, thanks to pent-up demand for moves following the first lockdown. There was also a suspension of stamp duty on property sales of up to £500,000 announced in July.
The stamp duty holiday finishes at the end of March, and a number of estate agents have seen buyers rush to meet the deadline.
Russell Galley, managing director of Halifax, said: “There are some early signs that the upturn in the housing market could be running out of steam, with the annual rate of house price inflation cooling to its lowest level since August. Industry figures for agreed sales remain well above pre-pandemic levels but new instructions to sell have decreased noticeably, and total stock held by estate agents has risen to its highest level since before the EU referendum in 2016.”
Galley added: “The stamp duty holiday has undoubtedly helped to fuel growing demand amongst households for larger properties. However, given the current time to completion across the market, transactions in the early part of 2021 probably don’t include many borrowers who expect to benefit from the stamp duty reprieve.”
He cautioned that it is challenging to predict how far and how deep any slowdown proves to be, given the prevailing uncertainty created by the pandemic.
However, Halifax’s Galley also said: “We saw the power of homeowners to drive the market in the second half of last year as many people looked to find new properties with greater space, spurred on by increased time spent at home. Such structural demand changes, coupled with any further policy interventions by government, could yet sustain underlying market activity for some time to come.”
Guy Harrington, chief executive of residential lender Glenhawk, said: “ Whist the end of the stamp duty holiday will undoubtedly hit transaction volumes, a combination of better than expected data from the Bank of England, the government’s Herculean effort to roll out the vaccine and an appetite for more rural living may well underpin robust values throughout 2021.”
