Janice R. Andrews
UK house prices fell by 0.1% in February, reflecting growing concerns over global economic instability, including the Ukraine war and potential tariffs from former US President Donald Trump. The decline comes as the housing market braces for stamp duty hikes set to take effect in April, adding pressure to an already fragile sector.
According to the Halifax House Price Index, the average home now costs £298,602, marking a 2.9% annual increase. However, affordability remains a significant challenge for buyers, with economic uncertainty dampening market sentiment. Holly Tomlinson, a financial planner at Quilter, warned that Trump’s tariff threats could further unsettle markets, potentially driving inflation higher and delaying Bank of England interest rate cuts.
The upcoming stamp duty changes are also causing concern. From April 1, the threshold for paying stamp duty will drop from £250,000 to £125,000, while first-time buyers will see their threshold reduced from £425,000 to £300,000. These changes could deter potential buyers, further slowing market activity.
Trump’s tariff policies are adding to the unease. While he temporarily paused a 25% tariff on some Canadian and Mexican imports, the threat of similar tariffs on EU goods—and potentially UK exports—looms large. China has already faced significant tariffs, ranging from 15% on clothing and food to 100% on electric vehicles, highlighting the potential impact on global trade.
Despite these challenges, Amanda Bryden, head of mortgages at Halifax, noted that the housing market’s underlying dynamics remain strong. A persistent shortage of housing supply, coupled with sustained demand, suggests property prices will continue to rise in 2024, albeit at a slower pace than last year.
As the April stamp duty deadline approaches, the market is likely to experience further fluctuations, with buyers and sellers navigating a complex landscape of economic and policy uncertainties.
