The UK housing market has seen a slowdown in house prices in December 2024, marking the first decline since March. Despite this, experts predict an increase in sales over the next few months due to upcoming changes in stamp duty.
Average House Prices Down by 0.2% from November
According to Halifax, the average house price in the UK fell to £297,166 in December, down by 0.2% from November. This decline follows five consecutive monthly increases. On an annual basis, prices were up 3.3%, a decrease from the 4.7% growth seen in November.
Regional Variations in House Price Growth
- Northern Ireland: The region showed the strongest annual house price growth in the UK, with prices increasing by 7.4% to an average of £205,895.
- Wales: House prices in Wales rose by 4.6% year-on-year, with properties costing an average of £226,646.
- Scotland: The annual rate was lower than in the rest of the UK, at 2.4%, to an average price of £209,959.
- London: Despite a decrease in house price growth, London retained the highest average house price across the country, at £547,614, up 3.3% year on year.
Stamp Duty Changes and Their Impact
Amanda Bryden of Halifax noted that the housing market was broadly steady at the start of 2024, with house price growth accelerating from the summer onwards. The upcoming changes to stamp duty, which will see the "nil rate" band for first-time buyers shrink from £425,000 to £300,000 in April, have given prospective first-time buyers more motivation to get on the housing ladder and bring any home-buying plans forward.
Mortgage Affordability and House Price Growth
Bryden also highlighted that mortgage affordability will remain a challenge for many, especially as the Bank of England base rate is likely to come down more slowly than previously predicted. However, providing employment conditions don’t deteriorate markedly from a more recent softening, buyer demand should hold up relatively well, and modest house price growth this year is still anticipated.
Expert Views on House Price Growth
- Matt Thompson: Despite the slowdown, Matt Thompson, head of sales at the estate agent Chestertons, noted that December 2024 was one of the busiest Decembers in years in terms of buyer demand, driven by first-time buyers and second-steppers.
- Ashley Webb: Ashley Webb, UK economist at Capital Economics, said that the 0.2% m/m fall in the Halifax house price index in December is at odds with the 0.7% m/m rise in the Nationwide measure and suggests that recent rises in mortgage rates may have started to weigh on the housing market at the end of last year a bit more than previously thought.
Forecast for House Price Growth in 2025
Separate figures by the lender Nationwide showed house prices rose more than expected in December and at the fastest annual rate since October 2022. Experts predict that house prices will rise by a healthy 3.5% in 2025 compared to the consensus forecast of 2.5-3.0%.
