UK house prices experienced a slight dip in December 2024, marking the first decline since March. However, industry experts anticipate a resurgence in sales and modest price growth in the coming months, fueled by upcoming stamp duty changes and falling mortgage rates. According to Halifax, the average house price in December was £297,166, a 0.2% decrease from November, following five consecutive months of increases. Despite the monthly dip, annual house price growth remained positive at 3.3%, albeit lower than the 4.7% recorded in November.
Table Content:
Regional Variations in UK House Price Growth
Significant regional variations in house price growth were observed across the UK. Northern Ireland led the way with a robust 7.4% annual increase, bringing the average house price to £205,895. Wales experienced a 4.6% year-on-year rise, with average property prices reaching £226,646. Scotland, however, saw more subdued growth at 2.4%, with an average house price of £209,959. London maintained its position as the most expensive region, with an average house price of £547,614, reflecting a 3.3% annual increase.
Impact of Mortgage Rates and Stamp Duty Changes
Amanda Bryden of Halifax attributed the housing market’s overall stability in early 2024 and subsequent growth to declining mortgage rates and rising incomes, which alleviated financial pressures on buyers. She highlighted the significant impact of impending stamp duty changes scheduled for April. The reduction in the “nil rate” band for first-time buyers from £425,000 to £300,000 is expected to incentivize prospective homeowners to accelerate their purchase plans. These stamp duty regulations apply to England and Northern Ireland. The changes mean that only 8% of homes for sale in London will be stamp-duty free for first-time buyers from April, compared to 24% in the south-east and 32% in the east of England.
2025 House Price Forecast: Modest Growth Anticipated
Looking ahead to 2025, Bryden anticipates modest house price growth, acknowledging the persistent challenge of mortgage affordability, particularly with the Bank of England base rate expected to decline more slowly than initially projected. However, she believes that sustained buyer demand, contingent on stable employment conditions, will underpin the market’s resilience. This optimistic outlook is shared by other market analysts. Matt Thompson, head of sales at Chestertons estate agents, reported a surge in buyer activity in December 2024, driven by both first-time buyers aiming to capitalize on pre-stamp duty changes and second-steppers seeking larger homes. Ashley Webb, a UK economist at Capital Economics, forecasts a healthy 3.5% rise in house prices for 2025, exceeding the consensus forecast of 2.5-3.0%, citing expectations of further mortgage rate reductions to 4.00%. This contrasts slightly with Nationwide’s data, which reported stronger-than-expected house price growth in December, reaching the fastest annual rate since October 2022.
Conclusion: UK Housing Market Poised for Continued Growth
Despite a minor setback in December 2024, the UK housing market demonstrates resilience and potential for continued growth in 2025. While mortgage affordability remains a key consideration, factors such as falling mortgage rates, government incentives, and consistent buyer demand are expected to contribute to a positive, albeit modest, upward trajectory in house prices. Regional variations will likely persist, with areas like Northern Ireland exhibiting stronger growth compared to more subdued performance in regions like Scotland. The long-term outlook for the UK housing market appears cautiously optimistic, with experts anticipating sustained activity and price appreciation in the coming year.
