Market News

UK house prices ended 2024 on a positive note, with a 4.7% year-on-year increase in December, according to the latest Nationwide House Price Index. The rise reflects resilience in the market despite affordability challenges and higher borrowing costs.

House prices rose 0.7% month-on-month in December, following a 1.2% increase in November (seasonally adjusted). Historically, December often sees a slowdown in activity due to the festive period, but the market defied expectations this year.

“While prices remain below the all-time high recorded in summer 2022, December’s performance shows that the market is adapting to the ‘new normal’ of higher but stabilising interest rates," Nationwide (NBS.L) chief economist Robert Gardner said.

The market’s resilience can be attributed to easing inflation, improving mortgage rates, and strong employment levels, Gardner said.

Mortgage rates hovered around 4.5% in 2024 — significantly higher than pre-pandemic levels.

"House prices grew by 4.7% annually, demonstrating a level of resilience despite the headwinds of higher borrowing costs and affordability pressures," Quilter financial planner Holly Tomlinson said.

Regional disparities

Regional disparities highlighted a continued north-south divide in house price performance.

Northern Ireland was the best-performing region for the second consecutive year, with house prices rising by 7.1% over 2024, according to Nationwide data. Scotland and Wales also saw solid growth, with prices up 4.4% and 2.7%, respectively.

In England, Northern regions outpaced their Southern counterparts. Northern England, comprising areas such as the North West, Yorkshire & The Humber, and the Midlands, saw a 4.9% annual increase. The North was the standout English region, with prices up 5.9%. In contrast, Southern England, including the South West, London, and East Anglia, recorded a more modest 2.2% rise, with East Anglia lagging at just 0.5%.

"The north-south divide in house price growth remained pronounced in 2024, with more affordable regions in the North continuing to outperform the South," Gardner said. "The resilience in Northern Ireland and Scotland reflects their relatively lower average house prices and strong local demand."

Policy impacts and outlook for 2025

Upcoming changes to stamp duty in April 2025 are expected to influence market dynamics in the near term. Buyers may rush to complete transactions before the tax increase, leading to a spike in activity in early 2025, followed by a slowdown later in the year.

"Stamp duty changes often create volatility in the market," Gardner said. "We anticipate a surge in transactions in Q1 2025, especially in March, followed by a cooling-off period, and this pattern makes it challenging to assess the underlying strength of the market during such periods."

Looking further ahead, experts remain cautiously optimistic about 2025. Gradual interest rate cuts by the Bank of England could support demand, while wage growth may help ease affordability concerns.

However, challenges persist, particularly for first-time buyers facing high deposit requirements and elevated rental costs.

“Borrowing rates and affordability pressures will continue to weigh on the market," said Propertymark CEO Nathan Emerson. "After the anticipated rush to beat the stamp duty deadline, we may see a calmer market, offering better opportunities for negotiation.”

Tomlinson echoed this sentiment, highlighting the importance of careful financial planning in navigating the uncertainties of 2025. While the market shows encouraging signs of stabilisation, she underscored the need for targeted measures to support first-time buyers, who are essential for revitalising activity at the lower end of the property ladder.