For the first time since March, UK house prices fell in December 2024, according to a report by Halifax. The average house price dropped by 0.2% from November, marking the end of five consecutive monthly increases.
Halifax Report: Key Findings
- The average house cost £297,166 in December 2024.
- House prices were up 3.3% on an annual basis, down from 4.7% growth in November.
- Northern Ireland showed the strongest annual house price growth in the UK, with a 7.4% increase to an average of £205,895.
Regional Variations
House prices varied across different regions in the UK:
- Wales: House prices were up 4.6% year-on-year, with properties costing £226,646 on average.
- Scotland: The annual rate was lower than in the rest of the UK, at 2.4%, to an average of £209,959.
- London: Retained the highest average house price across the country, at £547,614, up 3.3% year on year.
Experts’ Views
Amanda Bryden of Halifax said: "The housing market was broadly steady at the start of 2024, with house price growth taking off from the summer onwards."
She attributed the increase in house prices to:
- Falls in mortgage rates
- Income growth
These factors led to financial pressures easing for buyers. However, Bryden noted that changes to stamp duty from April have given prospective first-time buyers more motivation to get on the housing ladder and bring any home-buying plans forward.
Stamp duty applies in England and Northern Ireland. In London, only 8% of homes for sale will be stamp-duty free for first-time buyers from April. Some 24% will be stamp-duty free in the south-east, and 32% in the east of England.
Looking to 2025
Bryden said: "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."
Despite this, she anticipated modest house price growth this year. However, employment conditions could affect buyer demand.
Industry Insights
Matt Thompson, head of sales at the estate agent Chestertons, said: "December 2024 was one of the busiest Decembers in years in terms of buyer demand."
This was driven by:
- First-time buyers who were keen to get on the property ladder before this year’s changes to stamp duty
- Second-steppers, including young families, wanting to upsize
Ashley Webb, UK economist at Capital Economics, said: "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."
This suggests that recent rises in mortgage rates may have started to weigh on the housing market at the end of last year.
Consensus Forecast
Webb’s view that mortgage rates will fall further than most expect explains why he still thinks house prices will rise by a healthy 3.5% in 2025 compared to the consensus forecast of 2.5-3.0%.
Nationwide Figures
Separate figures by the lender Nationwide, which are based on mortgages it approves, showed house prices rose more than expected in December and at the fastest annual rate since October 2022.
The housing market is a complex phenomenon influenced by various factors, including mortgage rates, income growth, and employment conditions. As we look to 2025, experts anticipate modest house price growth, but challenges such as mortgage affordability remain.
Conclusion
The UK housing market has been characterized by fluctuations in recent months. While house prices fell in December 2024, experts expect sales to increase over the next few months ahead of stamp duty changes. As we navigate the complexities of the housing market, it is essential to consider multiple perspectives and forecasts to gain a comprehensive understanding of the trends and challenges that lie ahead.
Sources:
- Halifax
- Nationwide
- Capital Economics
Additional Reading:
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