Housing market activity proved resilient in 2024, despite ongoing affordability challenges, Nationwide’s House Price Review and Outlook for 2025 has revealed.
In light of this resilience, Nationwide predicted house price growth broadly in the range of 2% to 4% in 2025.
Robert Gardner, chief economist at Nationwide, reflected on the surprising resilience of the housing market in 2024, despite significant affordability challenges for buyers.
He noted that house prices remained “high relative to average earnings” at the start of the year, making it difficult for first-time buyers to save for deposits.
This challenge was exacerbated by “record rates of rental growth in recent years,” which made saving particularly hard for those in the private rented sector.
Gardner highlighted the strain of higher borrowing costs, explaining that “a typical mortgage rate for someone with a 25% deposit hovered around 4.5% for much of the year,” a significant increase from the 1.5% seen in late 2021.
This made monthly payments challenging for many buyers, even those who had managed to save for a deposit.
Despite these hurdles, Gardner found encouragement in the market’s recovery.
He said: “The number of mortgages approved for house purchase each month rose above pre-pandemic levels towards the end of the year.
“Similarly, after starting the year registering small annual declines, the pace of house growth moved firmly into positive territory, approaching 4% in November.”
Reaction:
Toby Leek, president at NAEA Propertymark:
“Propertymark members have reported an increasing interest in property with sales higher than usual, defying the usual winter lull usually seen this time of year.
“Buyers and sellers in England and Northern Ireland are looking to complete their home move before the Stamp Duty changes commence from April 2025, and it’s expected that coupled with slow increases in affordability and wages, this spike of momentum in mortgage approvals and housing market activity will continue.
“After this spike, buyers and sellers with time on their side may then reap the rewards of a slower paced market to ensure each step of their house move is fully considered.”
