The UK housing market recorded its sharpest monthly price drop in over 18 months in April 2025, as buyers and sellers adjusted to significant changes in stamp duty thresholds. Following a frantic surge in transactions in March, driven by buyers racing to complete purchases before new tax rules took effect, April brought a marked slowdown, according to the latest House Price Index data.
Figures released by Nationwide show that house prices fell by 0.6% month-on-month in April — the largest decline since August 2023. Annual price growth also eased, falling from 3.9% in March to 3.4%, bringing the average house price across the UK to £270,752.
This cooling in the market was widely anticipated after the government confirmed the end of temporary stamp duty relief measures on 31 March 2025. The most impactful change was for first-time buyers, whose tax-free purchase threshold was reduced from £425,000 to £300,000. Standard residential buyers also saw their tax-free threshold revert from £250,000 to £125,000, significantly increasing costs for many transactions. Additionally, buyers of second homes or investment properties were hit with a higher surcharge, rising from 3% to 5% above standard rates.
The result was a rush of completions in March as buyers tried to beat the deadline — mortgage borrowing that month soared to £13 billion, a level not seen since early 2021. But once the changes took hold in April, activity dipped sharply, pulling house prices down with it.
Despite the decline, economists remain cautiously optimistic about the outlook. Several underlying factors point to resilience in the market over the coming months. Unemployment remains low, and real wages are rising, supporting buyer confidence. The Bank of England is also widely expected to cut interest rates from 4.5% to 4.25% in the coming quarter, which could drive down mortgage costs and stimulate renewed activity.
However, affordability continues to be a major concern. First-time buyers face a particularly tough environment, grappling with high property prices, tighter lending criteria, and now, increased stamp duty obligations. Some analysts suggest that unless further support is introduced, younger buyers may be forced to delay homeownership.
There is also regional variation to consider. While London and the South East saw modest declines, other parts of the UK — such as the North East and Scotland — remained more stable, cushioned by lower average property prices and less exposure to the recent stamp duty thresholds.
Looking ahead, the housing market is expected to remain relatively subdued through the early summer before rebounding in the second half of the year, provided interest rates fall and mortgage competition intensifies. Lenders have already started to introduce sub-4% deals, and further reductions could unlock demand.
In summary, April’s dip in house prices reflects a natural rebalancing after March’s artificial spike. While the near-term outlook may be softer, the combination of economic stability, falling borrowing costs, and pent-up demand means the UK housing market could see renewed momentum before the year is out.
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