House prices decreased by -0.2% in December although annually, property prices are up +3.3% (vs +4.7% last month), latest figures from the Halifax revealed yesterday.
According to the latest data a typical property now costs £297,166.
Northern Ireland maintains the strongest property price growth of any nation or region in the UK, rising by +7.4% on an annual basis in December.
Properties in Northern Ireland now cost an average of £205,895.
REGIONAL VARIATIONS
House prices in Wales were up +4.6% compared to the previous year, with properties now costing an average of £226,646. Scotland saw a lower rise in house prices compared to the rest of the UK, with properties in the country now £209,959, +2.4% more than the year before.
In England, house prices in the North West were up +5.3% compared to the previous year, with properties now costing an average £238,832 – the strongest growth of any English region.
London retains the highest average house price in the UK, at £547,614, up +3.3% compared to last year.
BROADLY STEADY
Amanda Bryden, Head of Mortgages, Halifax, says: “The housing market was broadly steady at the start of 2024, with house price growth taking off from the summer onwards.
“In the latter half of the year, house prices grew in response to the falls in mortgage rates, alongside income growth, both leading to financial pressures somewhat easing for buyers.
“Impending changes to stamp duty thresholds have also given prospective first-time buyers even greater motivation to get on the housing ladder and bring any home-buying plans forward.”
INDUSTRY REACTION
Jonathan Hopper, Chief Executive of Garrington Property Finders, says: “December’s dip in house prices is likely to be little more than a pause for breath before the January bounce.
“Across the property market as a whole, business has been brisk during the first few days of the year. Pent-up demand is beginning to surface and several property portals reported record Boxing Day traffic.
“Activity is especially strong among first-time buyers, many of whom are racing to get into their new home before the stamp duty thresholds change at the end of March.
“This sense of urgency has led some first-timers to view in haste and offer high in order to do a deal quickly and give themselves a fighting chance of completing their purchase before the tax changes take effect.
“But higher up the market, things are proving tougher for sellers. A surge in the number of homes for sale has given buyers an abundance of choice, and with it the leverage to drive a hard bargain.
“In response, many sellers are having to hold down their asking prices or risk having their home sit unsold on the shelf.
“At the same time, most wealthy buyers remain highly price sensitive. With plenty of prime property to choose from, many are prioritising value, taking their time and negotiating hard – all of which is keeping price growth in check.
“With interest rates set to fall during 2025, cheaper mortgages will inject additional momentum to the market. But the pace of price rises is likely to stabilise once the temporary distorting effect of the stamp duty changes is past.”
STRONG POSITION
Iain McKenzie, CEO of The Guild of Property Professionals: “The market proved it resilience in 2024, and it has begun this year in a strong position with increased choice for buyers. While pricing will remain key, it is expected that we will continue to see house prices edge up over 2025.
“The rush to get transactions over the line before the Stamp Duty changes has been a catalyst to the market’s buoyancy as we headed into this year.
“There were also a number of buyers and sellers who stepped off the side-lines after postponing their decision to move due to higher mortgage rates. Zoopla have reported that there are currently around 283,000 sales progressing their way towards completion in the first half of this year, which is largest pipeline the market has seen in over four years.
“We could see demand temper after the stamp duty changes, however, the expected rate cuts should play a part in increasing sentiment in the market, bringing down mortgage rates and enticing more activity.
“While the Bank of England decided to hold the rate at 4.75% during the December meeting due to higher-than-expected inflation figures, financial markets are pricing in cuts – how many how cuts remain to be seen and will depend on inflation playing the game. It will be a balancing act of enticing economic growth, while keeping the reins pulled back on inflation.”
AFFORDABILITY OBSTACLE
Marc von Grundherr, Director of Benham and Reeves, says: “A marginal monthly decline in the rate of house price growth during December highlights the usual seasonal lull caused by the festive break.
“However, a strong annual rate of growth demonstrates a market that has very much found its form during the latter stages of 2024, following a period of prolonged economic turbulence largely driven by a spike in interest rates.
“Of course, affordability remains a sizable obstacle for today’s buyers, but the market resilience seen throughout 2024 has provided a very strong foundation for 2025 and it’s widely predicted that house prices are only going to go one way and that’s up.”
NO CAUSE FOR CONCERN
Verona Frankish, Chief Executive of Yopa, says: “December saw a first monthly decline in house prices following five consecutive months of positive growth, albeit a very slight drop, but this is certainly no cause for concern given the seasonality at play, with the market finishing the year in a far stronger position on an annual basis.
“In fact, a pause for breath was probably required ahead of what is set to be a very busy first quarter, as the stamp duty countdown continues with relief thresholds set to increase as of 1st April this year.
“As a result, we can expect house prices to continue to climb, with 2025 predicted to bring another year of upward growth.”
MORE PRESSURE
Tom Bill, head of UK residential research at Knight Frank, says: “The current rate of house price growth will come under more pressure as higher borrowing costs triggered by the Budget start to bite.
“A number of buyers are still sitting on sub-4% mortgage offers made before October, which has supported demand in recent months.
“Activity has also been temporarily boosted ahead of April’s stamp duty increase but a recent dip in mortgage approvals is a sign that cracks from the Budget are starting to show.
“We recently revised down our UK house price forecast for 2025 to 2.5% to reflect the tougher lending landscape and the fact economic growth is struggling to gain momentum.”
PRESSING CONCERN
Chris Baguley, group channel development director at Together, said: “The 2024 market drew to a close with prices falling 0.2%, a disappointing end after signs of wider recovery in the past few months.
“Given interest rates were only cut twice, the pace at which the Bank of England moves this year will be of pressing concern for homebuyers and those looking to remortgage.
“However, with the new stamp duty increases coming into effect this April, the anticipated flurry of property sales may trigger real action in the market with new buyers flooding in.
“Together’s own Residential Property Market Report indicates nearly one in five homeowners are looking to move in the next 12 months, so the appetite is clearly there.
“Those eager to move forward with their plans should explore the range of financial products and schemes available.
“First-time buyers can look at taking advantage of Shared Ownership, and for those looking for fast and flexible finance to jump on an opportunity, there is the option of bridging loans. Speaking to a professional mortgage advisor is a great way to assess all the options available before making a final decision.”
MORE CAUTIOUS
Tomer Aboody, director of specialist lender MT Finance, says: “As mortgage rates came down throughout last year, we have seen a corresponding rise in prices and activity in the housing market, as confidence and affordability enables buyers to take the plunge.
“With tax changes coming in 2025, along with stamp duty amendments brought in by the new Chancellor, the forthcoming year may be sightly different as buyers could be more cautious.
“We are hoping for some of the feel-good factor from 2024 to carry on in this forthcoming quarter, with sellers coming to market and increasing volumes.”
PRICES SOFTENING
Jeremy Leaf, north London estate agent and a former RICS Residential Chairman, says: “Although reflecting their customer mortgage offers before the Budget at the end of October, these always-reliable figures confirm what we have been seeing on the ground – in other words, buyers are taking advantage of the improved choice of property and negotiating hard which is resulting in some prices softening.
“Looking forward, nervousness remains as the full impact of the Chancellor’s decisions affect activity and the improved interest from first-time buyers to take advantage of disappearing beneficial stamp duty rates gradually eases out of the figures.”
MIXED OUTLOOK
Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, says: “The outlook for 2025 is mixed after the Bank of England decided to hold the base rate at 4.75% in December to ward off persistent inflationary pressures – a move that dented the hopes of those depending on another rate reduction to improve their affordability position.
“Two interest rate cuts in 2024 have not entirely eased the mortgage misery for many borrowers.
“While average 2 and 5-year mortgage rates did end the year lower than they started it, a higher inflation reading in December could result in a potentially slower pace of rate reductions in 2025. It means mortgage rates may not be heading downwards as fast as many borrowers would like.
“As cost-of-living pressures linger and households grapple with an ever-higher tax burden, a result of most personal tax thresholds remaining frozen until at least 2028, it’s understandable that some buyers are still feeling the squeeze.
“Affordability concerns have eased but they are far from over for many buyers, something that could hold back house price growth as the year unfolds.”
REMARKABLE RESILIENCE
Jason Tebb, President of OnTheMarket, says: “The housing market continues to evidence remarkable resilience, with encouraging levels of activity and interest.
“Affordability is keeping a lid on property values to an extent as buyers are unwilling or unable to pay inflated prices.
“Higher interest rates have an impact on activity and willingness to commit to a property purchase so news that some lenders have started cutting their mortgage rates this month, combined with expectations of further base rate reductions this year, should boost confidence and transactions – a better indicator of the health of the market than house price movements.
“A flurry of activity ahead of the end of the stamp duty concession ending in March should make for a busy spring market.”
ENCOURAGING START
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “Modest house price growth is being underpinned by borrowing costs which, while softening, remain higher than many borrowers were paying just a few years ago.
“With HSBC, Halifax and Leeds Building Society among those lenders reducing some of their mortgage rates this month, the new year has got off to an encouraging start. Borrowers will be hoping that other lenders follow suit and that the Bank of England delivers further rate reductions, helping ease affordability concerns.”
FIRST-TIME BUYER BOOST
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “While it’s still early in the year, there are encouraging signs for the housing market.
“Some lenders have already started to cut their fixed-rate mortgages, likely in response to further expected base rate cuts this year.
“We’re seeing a pick-up in activity from first-time buyers, perhaps trying to take advantage of the stamp duty concession before it ends in March, and a good number of market appraisals, which is often a precursor to a strong Spring market.
“While all this suggests growing confidence, it’s too soon to say for certain how the market will unfold.”
SECOND-STEPPERS
Matt Thompson, head of sales at Chestertons, says: “December 2024 was one of the busiest Decembers in years in terms of buyer demand.
“This was driven by first-time buyers who were keen to get on the property ladder before this year’s changes to stamp duty but also by second-steppers, including young families, wanting to upsize.”
UPBEAT AND CONFIDENT
Nathan Emerson, Chief Executive of Propertymark, says: “Our member agents recently reported that the overall number of properties achieving their asking prices has nearly doubled from 6% to 11% showing a real desire and confidence from prospective and current homeowners to approach the buying and selling process.
“As people start to feel more settled within their financial position, and with an expected rush as many people across England and Northern Ireland provision themselves to navigate stamp duty rises from April, we expect to see an upbeat and confident start to the year.”
