According to Nationwide’s latest data, British House prices increased by 0.4% in February, greater than expected. The unexpected 0.4% rise was ahead of expectation. This is as economists were expecting just a 0.2% rise. Prices are rising because buyer activity is on the rise. The rising buyer activity is because the deadline on the tax incentive on buying property will take place in March-end, impacting UK house prices.
Boost in Demand Due to Tax Breaks and Lower Borrowing Costs
There are several signs of a revival in the UK housing market. Several indicators have shown that the UK housing market is picking up. Nationwide’s report states that the tax change is encouraging buyers to rush into action ahead of the deadline as more transactions are happening. These factors significantly influence UK house prices.
Robert Gardner, chief economist at Nationwide, said the stamp duty change may cause fluctuations. “This change will likely lead to a pick-up in transactions in March and a subsequent lull, as seen with earlier stamp duty changes, said Gardner.”
Forecasts for Future Growth
Although we have seen some bounces in the market, there are hopes for improvement. According to a recent Reuters poll, home prices in Britain will gain 3.5% this year, an increase from prior estimates. The rapid acceleration of growth will be followed by a drop in growth rate but positive will still continue until 2026 with an expected increase of 4.0% owing to further interest cuts by the Bank of England. This long-term positive outlook suggests continued increases in UK house prices.
The annual increase in house prices in February was 3.9%, slower than 4.1% in January but nevertheless an increase from last year, reflecting the ongoing trends in UK house prices. The housing market is seeing a revival as buyers get a jump on the tax changes affecting the sector.
Overall, the UK housing market is showing signs of growth, and as the economic changes and government policies keep shaping the economy, future trends will be underway.
