UK house prices increased by 4.7% year-on-year in December 2024, according to the Nationwide House Price Index. Northern Ireland recorded the strongest growth, with prices rising by 7.1% over the year, while East Anglia had the weakest performance, with a modest 0.5% increase.
The average house price in the UK is now £269,426, up from £268,144 in November. Monthly house price growth slowed to 0.7% in December, down from 1.2% in the previous month.
Robert Gardner, Nationwide’s chief economist, said: “UK house prices ended 2024 on a strong footing, up 4.7% compared with December 2023, though prices were still just below the all-time high recorded in summer 2022. House prices increased by 0.7% month on month, after taking account of seasonal effects, following a 1.2% rise in November.”
Gardner added: “Mortgage market activity and house prices proved surprisingly resilient in 2024 given the ongoing affordability challenges facing potential buyers. At the start of the year, house prices remained high relative to average earnings, which meant that the deposit hurdle remained high for prospective first-time buyers. This is a challenge that had been made worse by record rates of rental growth in recent years, which has hampered the ability of many in the private rented sector to save.
“Moreover, for many of those with sufficient savings for a deposit, meeting monthly payments was a stretch because borrowing costs remained well above those prevailing in the aftermath of the pandemic. For example, a typical mortgage rate for someone with a 25 per cent deposit hovered around 4.5% for much of the year, three times the 1.5% prevailing in late 2021, before the Bank of England started to raise the Bank Rate.
“As a result, it was encouraging that activity levels in the housing market increased over the course of 2024 with the number of mortgages approved for house purchase each month rising above pre-pandemic levels towards the end of the year.”
Looking ahead to 2025, Gardner said: “Upcoming changes to stamp duty are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax. This will lead to a jump in transactions in the first three months of 2025 (especially in March) and a corresponding period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes. This will make it more difficult to discern the underlying strength of the market.
“But, providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth. The latter is likely to return to the 2-4% range in 2025 once stamp duty related volatility subsides.”
Reaction
Nathan Emerson, CEO of Propertymark:
“With a degree of uncertainty still looming regarding borrowing rates and affordability, alongside rises to Stamp Duty for buyers in England and Northern Ireland commencing from April 2025, many people are extremely keen to move sooner rather than later, defying the usual winter lull normally seen this time of year.
“However, once the dust has settled following the anticipated rush heading towards April, buyers and sellers may reap the rewards of a slower-paced market which may allow opportunities for greater negotiation on price from both buyers and sellers.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts:
“Transaction levels remain subdued compared with pre-pandemic norms, as high borrowing costs and high stamp duty continue to weigh on the market. There is a growing divide between well-priced homes, which are selling without too much trouble, and overpriced ones, which are stagnating.
“However, a fresh new year and the expectation of lower mortgage rates should restore buyer confidence and improve transaction numbers.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Borrowers looking for a bargain will be hoping for January sales from lenders with lower mortgage rates as we kick off the new year.
“The trend in new mortgage pricing was downwards in December but mortgage rates are likely to continue to yo-yo over the first quarter at this year at least.
“It is only when we start getting regular base rate cuts from the Bank of England that the market will respond favourably and Swap rates will fall. Until then Swaps are likely to continue to fluctuate, making it harder for lenders to consistently offer lower mortgage rates.
“Those looking to take out a mortgage in coming months should plan ahead as much as possible, speaking to a whole-of-market broker to reserve a rate. Should rates rise by the time you take out your mortgage, you are protected from those increases, but if rates fall, you can ask your broker to review what is available nearer the time.”
Holly Tomlinson, financial planner at Quilter:
The Nationwide House Price Index for December shows house prices have ended the year remarkably well given the economic circumstances of the last 12 months. Historically, December often sees house prices soften as reduced buyer activity and the distraction of the festive period take hold. However, this year’s data suggests there has been a 0.7% increase offering an insight into the state of the market as we close 2024.
“On an annual basis, prices grew by 4.7% demonstrating a level of resilience despite the headwinds of higher borrowing costs and affordability pressures. Strong employment levels, easing inflation, and improving mortgage rates have helped sustain demand, particularly in more affordable regions. December’s data provides tentative evidence that the market is adapting to the ‘new normal’ of higher but stabilising interest rates.
“First-time buyers remain a critical part of the market, but affordability challenges are hitting them particularly hard. The combination of elevated house prices, higher borrowing costs compared to a few years ago, and persistent inflation means saving for deposits remains a significant hurdle. The looming changes to stamp duty, due to come into effect on 1 April 2025, are likely to make purchasing even more difficult for this group, adding further costs at a time when every penny counts.
“The struggles of first-time buyers have a ripple effect across the housing market. Without this crucial cohort entering the ladder, the market risks becoming ‘glued up,’ as chains stall and transactions slow. Existing homeowners looking to sell and move up the ladder rely on the activity of first-time buyers to create liquidity at the entry level, and their absence could further dampen broader market recovery.
Looking ahead to 2025, the outlook is cautiously optimistic, but challenges persist. The Bank of England’s predicted future base rate cuts are expected to gradually ease the cost of borrowing, providing some support to demand. Wage growth, coupled with these lower rates, could help lift buyer sentiment further in the coming months. However, this will only go so far without targeted measures to ease the burden on first-time buyers and reignite activity at the lower end of the market.
“For those considering property moves, 2025 presents an opportunity to re-evaluate plans. While the signs of market stabilisation are encouraging, uncertainty remains, and careful financial planning will be key to navigating what could still be a challenging year.
Rachael Hunnisett, director, longer-term fixed rate lender April Mortgages:
“Closing 2024 with another month of house price growth is a positive note for the industry, marking a year of resilience and recovery.
“The previous set of house price figures from Nationwide showed the fastest rate of growth in two years, so this latest data highlights just how robust the market is.
“The outlook for early 2025 looks promising, with activity expected to rise as homeowners rush to complete transactions ahead of April’s stamp duty deadline. An increase in property listings could also foster more competitive pricing, offering buyers greater flexibility.
“Recent interest rate cuts have significantly boosted buyer confidence, playing a key role in the recovery of house prices throughout 2024. If inflation remains stable and rates continue to fall, the housing market could see even more momentum in the coming months.
“While the housing market shows signs of recovery, the average UK house price reaching more than £269,000 poses affordability challenges for many potential buyers entering into the new year.
“The volatility in pricing trends could still be pushing potential buyers to sit on the fence, so our advice is to speak to a professional mortgage advisor and think about how much risk you are comfortable with before choosing the right mortgage deal.
“However, while borrowing decisions are not going to get any easier next year, with further mortgage rate volatility likely, homeowners don’t have to settle for uncertainty.
“The best option for mortgage holders who want greater financial security is to avoid short-term deals that leave them more exposed to payment fluctuations.”
Tomer Aboody, director of specialist lender MT Finance:
“As 2024 came to a close, sentiment remained pretty strong.
“We have seen an increase in prices year-on-year, mostly due to the rate cuts which have made affordability easier and in turn, have brought more buyers and sellers back into the fold. Higher transaction levels have also made the market more buoyant.
“With the stamp duty concession ending in March, 2025 as a whole might not be as positive as everyone hopes but another rate cut early in the year could help ease any pain.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Prices have been stronger for cheaper properties and areas but overall more choice has prompted a better balance between supply and not just demand but increasingly proceed-able demand.
“Boxing Day was a good example – a much lower proportion than usual of nosy neighbours as buyers and sellers come to terms with the new normal; interest rates unlikely to fall quickly any time soon whereas wage rises are still exceeding inflation.
“We expect this pattern of sales progressing slowly to exchange with little or no renegotiation or fall through to continue with first-time buyers desperately trying to take advantage of the stamp duty concession before the beginning of April.”
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“December typically sees a pause in the property market, when hitting the streets for quality properties makes way for hitting the Quality Streets for the purple ones. However, like a salad or a spin class, property price rises made an unusual appearance in December, as the looming end of the stamp duty holiday persuaded people to leave the sofa for a spot of house hunting.
“The start of 2025 is likely to feel the impact of the tax break too, and buyers will be keen to rush sales through while there’s a decent chunk of tax to be saved. However, as time goes on, affordability threatens to keep a lid on both sales and prices. Prices are edging even closer to a record high, and with the average 2-year fixed rate mortgage sticking around the 5.5% mark, it means a real stretch for buyers.
“At a time when affordability is under so much pressure, your deposit will make a key difference, so it pays to consider whether there’s any way you can boost it. It’s worth talking to family, especially if they’re considering making gifts in order to deal with an inheritance tax threat. If you already have a Lifetime ISA, topping up with up to £4,000 this tax year will boost it by £5,000. If you don’t yet have one, you’re aged 18-39, and have at least a year until you plan to buy, you can open one now and cash in on the government bonus.”
Paresh Raja, CEO of Market Financial Solutions:
“For all the negativity that seemed to swirl around the property market last year, this data from Nationwide is a timely reminder that the reality is often far more positive than the speculation and debate surrounding house prices.
“On the one hand, a change in government and ongoing economic uncertainty undoubtedly caused challenges for buyers and sellers in 2024. On the other hand, two cuts to the base rate by the Bank of England, and expectations that there are more to come in 2025, gave borrowers greater confidence to re-enter the market, boosting buyer demand. That the average house price rose by nearly 5% underlines the remarkable resilience of the property market.
“We are clearly entering the New Year with some positive momentum. If further interest rate cuts do materialise, this momentum should build further. As lenders, we must be on hand to support borrowers and brokers, delivering the right products with speed and flexibility to ensure the market as a whole can flourish in 2025.”
