UK house prices finished 2024 with an increase of 4.7% compared to the start of the year, according to the Nationwide building society. Despite rising prices, the lender said the housing market demonstrated significant resilience. Terraced houses saw the greatest increase in value, with growth fastest in Northern Ireland. Northern England also experienced a more marked surge than in the south, but all areas saw price growth. The average British home’s value stood at £269,426 at the end of December, remaining below its peak level during the summer of 2022.
Low certainty about interest and mortgage rates and changes to stamp duty may work to depress the housing market in 2025, experts have warned. Industry insiders predict an increase in market activity in the lead-up to the stamp duty changes scheduled for April, followed by a falloff. Buyers currently pay stamp duty on properties worth £250,000 or more. This will reduce to £125,000, prompting a rush of activity. Similarly, first-time buyers currently avoid paying the duty on homes up to £425,000, but this will reduce to £300,000. Although experts hope to see interest rates reduce during the year, this is still uncertain. The Bank of England addresses the unpredictability of the current market, saying, “the world is too uncertain” to have confidence in falling interest rates predictions.
UK Finance predicts a 10% increase in mortgage lending for house purchases during 2025 and some lenders believe that potentially falling mortgage rates and rising wages could enhance housing affordability this year. However, analysts are sceptical about the ability of lenders to achieve this rise in lending. Looking ahead, affordability appears likely to remain an issue for British families, and around 4.4 million mortgage holders are due to see their payments increase by an estimated £146 per month on average by the year 2027. Nationwide’s data focuses on its own mortgage lending, thereby excluding cash buyers or buy-to-let transactions, which account for roughly one-third of the market. The Halifax will release its final 2024 data in the near future, making for a comparison with the rival Nationwide data
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