In February alone, house prices dropped by 0.1% following a 0.4% fall in January
British house price growth declined for a third month in a row in February, mortgage lender Halifax said on Friday, although analysts said measures announced by finance minister Rishi Sunak this week could boost the market’s pandemic boom.
House prices rose by 5.2% in annual terms last month, the smallest yearly increase since August and following growth of 5.4% in January, Halifax said.
In February alone, house prices dropped by 0.1% following a 0.4% fall in January.
Other measures of Britain’s housing market suggested the pandemic-driven boom in the housing market had started to fade ahead of the planned expiry of a temporary cut to property purchase tax (stamp duty) at the end of March.
But on Wednesday Chancellor Sunak partly extended this tax break until the end of September and announced a new mortgage guarantee scheme for first-time buyers (FTBs) who cannot afford large deposits.
The strengthening of the housing market has been excessive given economic fundamentals and the strength of prices will prove unsustainable, said Howard Archer, chief economic adviser to economic consultants EY ITEM Club.
Although activity and prices may get some near-term support from (Sunak) extending the full Stamp Duty threshold increase from end-March to end-June in the budget and then partially to end-September, he said.
Halifax said the outlook for the housing market in the longer term would depend on the economic recovery from the COVID-19 pandemic. Demand for houses fuelled by pent-up savings was likely to be countered by higher unemployment, in its view.
We would not expect the level of growth seen in house prices over the past year to be sustained throughout 2021, Halifax managing director Russell Galley said.
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