UK house prices fell by 2.7% in April, the sharpest monthly drop since mid-2024, as the housing market recoiled from a surge in transactions brought forward ahead of April’s stamp duty changes.

Official figures from the Office for National Statistics show that the average property price dropped by £7,500 to £265,000 compared with March.

Despite the steep monthly fall, prices remained 3.5% higher than a year earlier, although this annual inflation figure halved from the 7.0% reported in March.

The volatility is reflected in transaction volumes, which plummeted 63.5% month-on-month on a seasonally adjusted basis, according to HMRC data, as completions fell to just 65,000 for properties over £40,000 — 28% below April 2024’s level.

NATIONAL AND REGIONAL

The collapse in completions came after a pronounced rush in March as buyers moved to beat the 1 April changes to Stamp Duty Land Tax. Transaction volumes in England and Northern Ireland bore the brunt of the drop, falling by 70.7% and 60.3% respectively.

In contrast, activity in Scotland and Wales held up more robustly, recording declines of just 9.1% and 19.1%.

Regionally, Northern Ireland led annual price growth with a 9.5% rise, followed by Scotland at 5.8%. England, which accounts for the majority of transactions, saw a more modest 3.0% year-on-year increase, with the North East posting the strongest performance at 6.4%. The South West saw the weakest growth, at just 0.9%.

The latest update to the UK House Price Index, rebased to January 2023, shows the index at 101.7 in April.

NO CAKEWALK IN SIGHT

Market indicators suggest further pressure ahead. Mortgage approvals dropped to 60,500 in April, down for the fourth consecutive month, while the Royal Institution of Chartered Surveyors described housing sentiment as “slipping deeper into negative territory”.

According to the Bank of England’s latest agents’ report, economic uncertainty continues to weigh on buyer demand, dampening the impact of fiscal changes and maintaining downward pressure on prices and activity levels.

Richard Donnell, executive director of research at Zoopla, said the market was entering a buyers’ phase, noting that “home buyers face a large choice of homes for sale”.

He added that price growth would likely be stronger in the Midlands, northern England and Scotland, where affordability remains less of a constraint.

Iain McKenzie, chief executive of The Guild of Property Professionals, played down fears of a prolonged downturn. “The stamp duty rush created a temporary statistical blip,” he said.

“The market has now digested those changes and is returning to a strong, sustainable rhythm.” He added that a rise in buyer demand and greater choice were signs of a healthy, balanced market.

Jeremy Leaf, a north London estate agent and former RICS residential chairman, warned that April’s data lagged the market and masked more recent softening. “Stock levels have continued to rise, resulting in more balance between supply and demand,” he said.

“Looking forward, values are likely to continue to reduce a little… as interest rates will not fall as far and as fast as many had expected.”

Rental inflation, meanwhile, continues to weigh heavily on tenants. Louisa Sedgwick, managing director of mortgages at Paragon Bank, said that “the supply of privately rented homes continues to be below the levels seen before the pandemic” and that rising rents would persist, driven by demographic trends and lack of housing stock.

Amy Reynolds, head of sales at London estate agency Antony Roberts, said demand in the capital remained resilient, particularly among first-time buyers, many of whom were turning to family support to enter the market amid limited rental supply.

The rise in first-time buyer activity was also noted by Darrell Walker, group sales director at Chetwood Bank, who said: “Offering greater flexibility, and providing certainty wherever possible will be crucial in driving the market forward over the summer months.”

Despite current headwinds, some remain optimistic. Paresh Raja, chief executive of Market Financial Solutions, argued that the market retains “strong, stable” foundations, with the potential for renewed momentum should interest rates begin to fall.

“Lenders have to be responsive,” he said. “Products must adapt in line with the needs of borrowers and the economic conditions.”

But Karen Noye, mortgage expert at Quilter, cautioned that the current ONS data may be subject to revision.

Only 44% of expected transactions had been captured at the time of publication, and the new-build segment often lags in reporting. She said underlying conditions remained “challenging”, with affordability stretched and fixed rates still well above pre-2022 levels.