Its latest house price index revealed prices had increased by 6.4% over the year to January compared to the 7.3% annual growth experienced in December.
Month-on-month, Nationwide’s figures revealed, prices dropped by 0.3% meaning the average house price was now £229,748 – compared to just over £230,920 in December.
Robert Gardner, Nationwide’s chief economist, said: “To a large extent, the slowdown probably reflects a tapering of demand ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.
“While the stamp duty holiday is not due to expire until the end of March, activity would be expected to weaken well before that, given that the purchase process typically takes several months (note that our house price index is based on data at the mortgage approval stage).”
The data comes just after the Bank of England revealed mortgage approvals for house purchases were higher in 2020 than in 2019.
And the index was also published just a day after MPs debated in parliament the possibility of extending the stamp duty deadline. There are fears the ‘cliff edge’ scenario could mean some buyers – particularly those who have begun the process of buying a home but might not complete until after the 31 March deadline – could miss out on the tax break.
Market ‘catching up with itself’
Nationwide’s figures came as no surprise to estate agents who said they had been experiencing signs of the slowdown for over a month.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The slowing of the pace of prices rises is no surprise and is what we have been seeing on the high street since Christmas.
“The market is catching up with itself as the chances of buyers and sellers beating the stamp duty deadline by the end of March recede, even if a withdrawal is phased, as seems possible now.”
He said estate agents were expecting to see a softening of prices and transaction numbers rather than a major correction.
He added: “Those likely to miss out on the stamp duty saving due to backlogs tell us they would prefer to compromise on price rather than miss out on the property they have set their hearts on.”
Lenders navigating a ‘fine line’
Meanwhile Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The runaway housing market is starting to show the first indications of taking a foot off the gas.”
He added: “The next few months will be interesting. As we head towards the deadline for taking advantage of the stamp duty holiday, lenders are navigating a fine line between the need for volume and market share versus risk appetite and service.
“There is a certain amount of chopping and changing on rates and products as lenders deal with unprecedented circumstances. However, with interest rates unlikely to rise anytime soon, mortgage rates should remain competitive.’
