UK House Prices End 2024 Higher
UK house prices rose by 4.7% in 2024, according to figures from Nationwide. Despite affordability challenges, the housing market showed "remarkable resilience," the lender reported. By December, the average UK property price had reached £269,426, although this remains below the peak levels seen in mid-2022.
Nationwide, the country’s largest building society, noted that terraced homes saw the sharpest price increases over the year. Regionally, Northern Ireland recorded the fastest growth, with property values in northern England also rising more quickly than in the south. All UK regions, however, experienced price increases.
The housing market faces an uncertain 2025, with changes to stamp duty and fluctuating mortgage rates expected to impact buyers and sellers. Experts predict a surge in property transactions ahead of the stamp duty revisions in April, followed by a slowdown afterward.
From April, homebuyers in England and Northern Ireland will start paying stamp duty on properties priced over £125,000, compared to the current threshold of £250,000. For first-time buyers, the stamp duty exemption will be reduced from £425,000 to £300,000.
The Bank of England is widely expected to reduce interest rates gradually during 2025, potentially starting in February. This could encourage lenders to lower fixed mortgage rates, offering some relief to buyers. However, Andrew Bailey, the Bank of England governor, warned that ongoing global uncertainty makes it difficult to predict how soon or how much rates will fall.
Nationwide’s chief economist, Robert Gardner, highlighted that house prices remain high compared to average earnings, making it challenging for first-time buyers to save for a deposit. This issue has been worsened by record rent increases in recent years, which have limited renters' ability to save. Similar sentiment has been shared by several industry pundits who have indicated that the upcoming stamp duty changes could add further financial pressure on first-time buyers.
While some lenders anticipate improving housing affordability in 2025 due to falling mortgage rates and rising wages, others remain cautious. UK Finance, the lenders’ trade body, forecast a 10% rise in mortgage lending for house purchases in 2025, though some analysts have questioned whether this outlook is overly optimistic.
UK house prices rise 4.7% in 2024, but buyers face uncertain 2025 amid stamp duty changes and mortgage challenges.
Looking ahead, many homeowners could still face difficulties. The Bank of England estimates that 4.4 million mortgage holders will see their monthly payments rise by 2027 as their current fixed-rate deals expire. Homeowners coming off fixed rates in the next two years could see their monthly payments increase by an average of £146.
Although mortgage rates may fall in 2025, they are expected to remain higher than the rates locked in by many homeowners on their existing fixed-rate deals.
Nationwide’s house price data is based on its own mortgage lending, excluding cash buyers and buy-to-let transactions. Cash buyers currently account for around one-third of property sales in the UK.
Rival lender Halifax is expected to release its 2024 house price report in the coming days, which will provide further insight into the market’s performance.
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