UK house prices ended 2024 with a strong finish, marking a 4.7% year-on-year increase in December, according to the latest data from the Nationwide House Price Index. This rise reflects the ongoing strength of the market, despite challenges such as higher borrowing costs and affordability concerns.
In December, house prices rose by 0.7% compared to November, following a seasonally adjusted increase of 1.2% the previous month. Typically, the market slows down in December due to the festive season, but this year, it defied expectations.
“While prices remain below the all-time high recorded in the summer of 2022, the December performance shows that the market is adjusting to the ‘new normal’ of higher, but stabilising, interest rates,” said Robert Gardner, Nationwide’s Chief Economist.
The market’s resilience can be attributed to factors such as easing inflation, improving mortgage rates, and strong employment levels. Mortgage rates hovered around 4.5% throughout 2024, still significantly higher than pre-pandemic levels.
“House prices grew by 4.7% annually, demonstrating resilience despite the challenges of higher borrowing costs and affordability pressures,” commented Holly Tomlinson, a financial planner at Quilter.
Regional Disparities in House Price Growth
The UK housing market saw notable regional differences in performance throughout 2024, with a continued north-south divide in house price growth.
Northern Ireland outperformed other regions, marking the highest growth for the second consecutive year with a 7.1% rise. Scotland and Wales also experienced solid growth, with house prices up 4.4% and 2.7%, respectively.
In England, the northern regions outpaced the south. The North West, Yorkshire & The Humber, and the Midlands saw a 4.9% increase, with the North itself standing out with a 5.9% rise. Meanwhile, the South of England, including areas such as the South West, London, and East Anglia, experienced a more modest 2.2% increase, with East Anglia lagging at just 0.5%.
“The north-south divide in house price growth remained pronounced in 2024, with more affordable regions in the North continuing to outperform the South,” Gardner said. “The resilience in Northern Ireland and Scotland reflects their relatively lower average house prices and strong local demand.”
Policy Changes and Outlook for 2025
Upcoming changes to stamp duty in April 2025 are expected to influence market dynamics in the short term. Buyers may rush to complete transactions before the tax increase, leading to a surge in activity in early 2025, followed by a slowdown later in the year.
“Stamp duty changes often create volatility in the market,” Gardner explained. “We anticipate a surge in transactions in Q1 2025, especially in March, followed by a cooling-off period. This makes it difficult to assess the true strength of the market during such periods.”
Looking further ahead, experts remain cautiously optimistic about 2025. Gradual interest rate cuts by the Bank of England could support demand, while wage growth may ease affordability concerns.
However, challenges remain, particularly for first-time buyers, who continue to face high deposit requirements and elevated rental costs.
“Borrowing rates and affordability pressures will continue to weigh on the market,” said Nathan Emerson, CEO of Propertymark. “After the anticipated rush to beat the stamp duty deadline, we may see a calmer market, offering better opportunities for negotiation.”
Tomlinson echoed this sentiment, stressing the importance of careful financial planning in navigating the uncertainties of 2025. While signs of stabilisation are emerging, she emphasized the need for targeted support for first-time buyers, who play a crucial role in revitalising activity at the lower end of the property market.
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