For the first time since March 2024, UK house prices experienced a decline in December 2024. This development comes as housing experts anticipate an increase in sales over the next few months, particularly ahead of stamp duty changes set to take effect from April.
Average House Prices: A Slightly Decreased Value
According to Halifax, the average house price in the UK was £297,166 in December 2024. This represents a 0.2% decrease from November’s figure, marking five consecutive monthly increases. On an annual basis, prices were up by 3.3%, a slight drop from the 4.7% growth observed in November.
Regional Variations: Northern Ireland Leads the Pack
Northern Ireland displayed the strongest annual house price growth across the UK, with a 7.4% increase to an average of £205,895. In Wales, property prices rose by 4.6% year-on-year, averaging £226,646. Meanwhile, in Scotland, the annual rate was lower than the rest of the UK at 2.4%, with properties costing an average of £209,959.
London Remains a Top-Selling Destination
The capital city retained its position as the location with the highest average house price across the country, at £547,614. This represents a 3.3% year-on-year increase.
Housing Market Analysis: A Mixed Bag of Predictions
Amanda Bryden of Halifax offered her insights on the current housing market: "The housing market was broadly steady at the start of 2024, with house price growth taking off from the summer onwards." She noted that in the latter half of the year, house prices grew in response to falling mortgage rates and income growth, which alleviated financial pressures for buyers.
Stamp Duty Changes: A Catalyst for First-Time Buyers
The upcoming changes to stamp duty, set to take effect from April, are expected to motivate prospective first-time buyers to secure their place on the housing ladder. In England and Northern Ireland, the "nil rate" band for first-time buyers will shrink from £425,000 to £300,000.
London’s Limited Stamp Duty-Free Options
A mere 8% of homes for sale in London will be stamp-duty free for first-time buyers come April. However, 24% of properties in the south-east and 32% in the east of England are expected to qualify for this benefit.
Looking Ahead: Challenges and Opportunities in 2025
Bryden emphasized that mortgage affordability will remain a challenge for many, particularly with the predicted slower decline of the Bank of England base rate. However, she expressed optimism about buyer demand holding up relatively well, provided employment conditions do not deteriorate.
Buyer Demand: A Mixed Response to Stamp Duty Changes
Despite the slowdown in house prices, Matt Thompson, head of sales at Chestertons, observed that December 2024 was one of the busiest Decembers in years for buyer demand. This surge can be attributed to first-time buyers eager to secure a place on the property ladder before stamp duty changes take effect and second-steppers seeking to upsize.
Contrasting Views: Experts Weigh In
Ashley Webb, UK economist at Capital Economics, highlighted the discrepancy between the Halifax and Nationwide house price indices. He noted that recent rises in mortgage rates may have started to weigh on the housing market more than previously thought.
However, Webb also expressed his expectation of a 3.5% annual increase in house prices for 2025, which is higher than the consensus forecast of 2.5-3.0%. This prediction stems from his view that mortgage rates will fall further than most expect to 4.00%.
Nationwide Figures: House Prices Rose More Than Expected
Separate figures from Nationwide revealed that house prices rose more than expected in December, with the fastest annual rate since October 2022.
Conclusion
The UK housing market is poised for a mixed bag of developments in 2025. While house prices have experienced a slight decrease in December 2024, expectations of increased sales and changes to stamp duty create an uncertain yet promising landscape for buyers and sellers alike. As the market continues to navigate challenges and opportunities, one thing remains clear: the housing market will remain a dynamic and evolving entity in the coming months.
