UK Property Market Sees Continued Growth in February

The UK housing market saw another increase in average house prices in February, but the rate of annual growth has begun to slow down. The average UK house price stands at £270,493, which is a 0.4% increase from the previous month. This is more of an increase than the 0.1% increase seen in January, but the year-on-year growth rate has dipped slightly to 3.9% from 4.1% at the start of the year.

Stamp Duty Reform Fueling Market Volatility

Analysts believe that the future reform of Stamp Duty in April will result in greater volatility in the market. Buyers will attempt to complete the deals ahead of time before the extra charge starts, which may generate a short-term sales spike, followed by reduced activity in the following months.

Quilter mortgage specialist Karen Noye expects this boom to push the price of houses shortly: "With possible reform of stamp duty on the agenda, month-to-month growth is likely to be sustained. There is a stampede to exchange before costs rise for tax, and more demand would propel the price higher short-term.".

For first-time buyers, the failure to have the increased prolonged rate of Stamp Duty is an added barrier. For those who spent decades saving deposits, a tax imposition of £5,000 plus is threatening to make it no longer affordable, as well as the cost of ownership.

Demand and Supply Remain Market Drivers

Despite the slackening demand in some areas in the market, the scarcity of available houses to buy is sustaining the level of activity. Jeremy Leaf, north London estate agent and former Chairman of RICS Residential, also said: "There has been a rush of first-time buyers rushing to capitalise on lower stamp duty costs. But now, time is running out, prices are beginning to stabilise, and we are seeing a more even balance between demand and supply. That is without acknowledging that there remains a lack of housing, certainly in some price bands, that is supporting demand from buyers."

However, cost remains a problem. With inflation at 3%, higher than the Bank of England target, speculation runs that interest rates will need to go up again, increasing the cost of mortgages and, in so doing, reducing demand.

Magnate Assets Commentary: Why Investors Should Still Look to UK Property

Where short-term volatility is generating uncertainty in the market, UK property is a solid investment option for domestic and international purchasers alike. Rental housing demand is increasing, especially as the UK competes to secure high-quality professionals. Supply shortages continue to ensure rental yields remain appealing, with investors able to gain a guaranteed income stream along with the potential for capital growth.

Magnate Assets stated: "While regulatory changes like Stamp Duty reforms create short-term ripples, the underlying forces of UK property investment are strong. The long-term housing demand, particularly in prime cities, guarantees investors with a long-term outlook will still enjoy strong returns."

For those who want to capitalise on UK property market trends, now is still a good time to look at investment prospects before prices get back on their long-term growth trajectory.