Housing transactions in the first quarter of next year will surge, analysts predict.

The end of the first time buyers’ stamp duty holiday has been confirmed as April 1 next year. This holiday was ushered in by the [2022] mini-Budget, and means there’s no stamp duty for first-time buyers on the first £425,000 of a property’s value – up from £300,000. 

This applies to all homes worth up to £625,000 – up from £500,000 previously. For existing owners, the threshold was doubled from £125,000 to £250,000. 

Now Sarah Coles, personal finance analyst at business consultancy Hargreaves Lansdown, says: “The end of the holiday is likely to mean a rush of purchases early next year, to get in ahead of the change, so we could see prices rise at that point as buyers bring forward their plans. Once the higher rate kicks in, we could well see some of that unwind.”

That view is shared by Nationwide chief economist Robert Gardner who says: “The main impact of the stamp duty changes is likely to be on the timing of property transactions, as purchasers aim to ensure their house purchases complete before the tax change takes effect.

“This will lead to a jump in transactions in the first three months of 2025, especially in March, and a corresponding period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes. However, the swings in activity are likely to be somewhat less pronounced, in this instance, given that the stamp duty reduction has been in place for some time and its planned expiry was well known.

Gardner adds: “Affordability is also still relatively stretched at present as a result of the higher interest rate environment, which is acting to dampen housing market activity more generally. Nevertheless, determining the underlying strength of the market will become more challenging until this period of volatility passes.”

Nationwide says changes to stamp duty thresholds will affect around one in five first time buyers“though the impact will vary significantly across the country, largely as a result of the difference in house prices across the UK”.

It wants that the South East is likely to be the hardest hit, as 40% of FTBs currently pay between £300,000 and £425,000 for their homes. The change will cost these buyers an extra £2,900 on average.

And Coventry Building Society’s head ofiIntermediary relationships – Jonathan Stinton – joins in, saying: “First time buyers are left in an increasingly tough spot. Buyers in London will have to find an extra £6,000 for the tax on their home come April, which isn’t exactly spare change they have lying around – this is a jolting hike.

“First time buyers need help and support to get on the ladder, but if almost a quarter of them are paying Stamp Duty even the extended thresholds aren’t doing enough. At the very least we would have liked to have seen the thresholds made permanent in yesterday’s announcement, even if it was just for first time buyers, as they can be the catalyst for additional property activity.

“First time buyers who can’t move before next March will need to ready themselves for the hike. It could be a lot to try and save, so many new buyers may turn to family to make up the difference – putting even more pressure on the Bank of Mum and Dad.”