House price growth slows in March
The latest house price data published by HM Land Registry (HMLR) for March 2022 has shown that average house prices in the UK increased by 9.8% in the year to March 2022, down from 11.3% in the year to February 2022.
March 2022 saw UK house price growth slow to 9.8%
Annual house price rates of change for all dwellings, UK, January 2006 to March 2022
Because of the impact of COVID-19 on both the number and supply of housing transactions, we might see larger revisions to the published UK House Price Index (HPI) estimates than usual.
There may be increased volatility in this month’s estimates, particularly at the lower geographical levels where transaction volumes are smaller. We are looking at options to improve this, including working with data suppliers.
In particular, HMLR has been increasing the level of automation in the way they process applications. As a result of this process, initial data numbers may be lower than pre-coronavirus pandemic transaction volumes; however, in the medium to long term, this will lead to higher volumes being processed.
The total number of processed transactions feeding into this month’s data (including those from previous months, which are incorporated in line with our revisions policy) has increased compared with the numbers seen throughout the coronavirus pandemic period. While this indicates an improvement in the quality of the UK HPI estimates going forward, it may also result in revisions to previous months that are higher than usual, as more transactions are now available in our calculations.
The latter half of 2020 saw the UK’s average house price growth accelerating. This trend continued into 2021 and house price growth has remained strong since the start of 2022; the UK average house price for March 2022 was £278,000, unchanged from the record level seen in February 2022.
On 8 July 2020, changes to the tax paid on property purchases were announced with immediate effect in England and Northern Ireland. Similar changes came into effect slightly later in Scotland and Wales (15 July and 27 July, respectively). In England and Northern Ireland, properties up to the value of £500,000 would incur no tax, while the thresholds for Scotland and Wales were £250,000. These changes in the tax paid on housing transactions may have allowed sellers to request higher prices as the buyers’ overall costs were reduced.
On 3 March 2021, an extension to the Stamp Duty holiday in England and Northern Ireland was announced. This meant that the tax holiday was extended until 30 June 2021, after which the threshold decreased to £250,000 until 30 September 2021. From 1 October 2021, the Stamp Duty thresholds have reverted to what they were before 8 July 2020. The tax holiday for Scotland ended on 31 March 2021. The tax holiday for Wales ended on 30 June 2021.
As the tax breaks were originally due to conclude at the end of March 2021, it is likely that March’s average house prices were slightly inflated as buyers rushed to ensure their house purchases were scheduled to complete ahead of this deadline. This effect was then further exaggerated in June 2021 in line with the extension to the holiday on taxes paid on property purchases in England, Wales and Northern Ireland. They could be seen again in September 2021 when the last of the tax holidays came to an end in England. An increase in prices since then has resulted in a record average house price level in the UK of £278,000 in March 2022.
The provisional seasonally adjusted estimate of UK residential transactions in March 2022 was 114,650, as shown in the Monthly property transactions statistics published by HM Revenue and Customs (HMRC). This is 35.7% lower than March 2021 and 2.6% higher than February 2022.
Figure 2: Average UK house price increased to £278,000 in March 2022
Average house price, UK, January 2005 to March 2022
The average UK house price was £278,000 in March 2022; this is £24,000 higher than in March 2021.