UK housing market takes time out: A cooling trend or a sign of things to come?

It seems like just yesterday we were talking about soaring house prices but things have definitely started to cool down. 

The UK housing market is a constant source of fascination and anxiety for many and for now it seems to be taking a small break.

The latest figures from the Nationwide House Price Index reveal a somewhat subdued picture. 

October saw a mere 0.1% increase in house prices month-on-month, with the annual growth rate slowing to a modest 2.4%. 

While this might spark whispers of a downturn, a closer look reveals a market that is recalibrating rather than collapsing.

The market is still very resilient – despite some concerns over last week’s budget.  

Yes, the heady days of double-digit growth are behind us but several factors suggest a degree of underlying resilience.  

Mortgage approvals are almost back to pre-pandemic levels and we also have a relatively strong jobs market.

Looking ahead, the path of the housing market hinges on a number of factors but it’s the economic outlook which is key.  

If the UK economy continues its recovery, as many predict, we can expect a gradual strengthening of the housing market. This would also be supported by any easing of interest rates, making mortgages more accessible.

However, there are challenges on the horizon. 

The Chancellor's budget last week confirmed the end of the stamp duty holiday in March 2025.  

This is likely to trigger a flurry of activity in the first quarter of 2025 as buyers rush to complete their purchases before the tax break expires. 

So it’s likely that we can expect a surge in transactions, particularly in March, followed by a potential slowdown in the subsequent months as the market adjusts.

Looking ahead and despite some gloomy forecasts out there, I personally think things will start to pick up a bit. 

If the economy keeps growing like we expect, and interest rates drop a little, more people will be able to afford a mortgage.  

Of course, we can't ignore what’s going to happen with stamp duty.  

The Chancellor has confirmed that the higher threshold for stamp duty will end in March 2025. 

This looming deadline will undoubtedly impact first-time buyers, particularly those in the South East where property prices are higher. A significant proportion of first-time buyers in this region will face a jump in stamp duty costs, potentially adding thousands of pounds to their purchase.

This means buyers will rush to complete their purchases before then to avoid those extra costs. 

With that in mind, expect a busy start to 2025, followed by a bit of a lull.

If you’re a first-time buyer the time to act, if you can, is now.

 Despite these headwinds, there's a sense that the market is holding its own. Buyer confidence remains relatively strong, and while affordability is stretched, it hasn't reached breaking point.  

The recent Budget, while not offering any direct stimulus to the housing market, has avoided any drastic measures that could have triggered a sharp downturn.

Overall, I'm feeling cautiously optimistic.  

There's still a lot of buyer confidence out there, and while the market might slow down a bit, I don't see a crash on the horizon.  

We've weathered the storm so far, and with a bit of luck, we'll come out the other side stronger than ever.

Remember, smart choices start with expert advice – speak to your mortgage adviser to get the best for your financial future.