Following six months of roaring prosperity, the U.K.’s real estate market is beginning to show signs it’s coming back down to earth, according to a report Tuesday from Nationwide.

Property prices slowed in January for the first time since June, with buyers’ gusto fading amid the approaching stamp duty holiday deadline and the latest coronavirus lockdown.


Values increased 6.4{e41d5a0df0c888fd9de3d970fd27b1e84b5ed5fef9cdbc0805e2ccc9025135a4} annually last month, down from 7.3{e41d5a0df0c888fd9de3d970fd27b1e84b5ed5fef9cdbc0805e2ccc9025135a4} in December and leaving the average price in the country at £229,748 (US$313,694), the bank and mortgage provider said.

Expiring on March 31, the stamp duty holiday—an economy-boosting tax break on home buys below £500,000 and a tax saving on sales above that—was one of the catalysts for the U.K.’s recent thriving real estate market.

“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,” Robert Gardner, Nationwide’s chief economist, said in the report. “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.”


Though there have been numerous calls for the deadline on the tax saving to be pushed back, there has been no official word of an extension, and the ambiguity surrounding its end has coincided with stricter lockdown measures introduced Jan. 4 and fast-spreading new Covid-19 variants, according to brokerage and property consultant Knight Frank.

“The housing market hit peak uncertainty during the pandemic in January,” Tom Bill, head of U.K. residential research at Knight Frank, said in response to Nationwide’s data.

“The sensible option would be to taper the holiday and avoid any cliff-edge moments for the housing market or wider economy, particularly given how important the mobility of labor will be in coming months,” he continued. “We expect prices to end the year flat as demand becomes steadier and more seasonal in the second half of this year.”