UK house prices grow again marking strong end to 2024 plus what’s next for New Year

UK house prices have grown again marking a strong end to 2024, according to Nationwide.

The building society said the average price of a property rose by 0.7% in December, up from 1.2% the month before.

Meanwhile, the annual price growth rate was 4.7% compared with December 2023.

Across the UK, the average house price in December was £269,426, a rise from £268,144 in November.

Robert Gardner, chief economist at Nationwide, said: “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.”

What will happen in 2025

The latest figures from Nationwide come ahead of major stamp duty changes later this year.

Second-home buyers will face a stamp duty rate rise of two percentage points – from 3% to 5% – from April.

Plus, stamp duty thresholds will also fall in the spring, with first-time buyers buying a property valued at £425,000 incurring a stamp duty charge of £6,250.

Stamp duty is one of the additional upfront costs that purchasers may incur when buying a property.

Currently, first-time buyers are exempt from paying stamp duty on properties priced up to £425,000.

If a property is more expensive, they only pay tax at 5% on the portion above £425,000 and up to £625,000.

But changes to stamp duty are believed to have accelerated demand as homemovers look to secure a deal beforehand.

Nationwide said this will continue in the New Year, leading to a jump in transactions in the first three months.

STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.

You pay the tax when you:

• Buy a freehold property
• Buy a new or existing leasehold
• Buy a property through a shared ownership scheme
• Land is transferred to you or property in exchange for payment, for example, you take on a mortgage or buy a share in a house

The rate you pay depends on the price and type of property and certain thresholds:

The current thresholds are:

• £250,000 for residential properties
• £425,000 for first-time buyers buying a residential property worth £625,000 or less
• £150,000 for non-residential land and properties

The rate of SDLT you’ll have to pay is different depending on whether it is residential, a second home or buy-to-let, or whether you’re a first-time buyer.

However, the building society said it still expects the “underlying pace” of housing market activity to continue to grow afterwards as interest rates fall and earnings outpace house price growth.

The BoE cut interest rates twice in 2024, most recently in November when it was slashed from 5% to 4.75%, with further rate cuts expect this year.

The base rate is the rate charged to major banks and building societies who pass this on in the form of higher mortgage rates.

Holly Tomlinson, financial planner at Quilter, said: “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, it’s not all good news in the housing market.

The BoE is also warning that around 4.4million households could see hikes to their mortgage repayments over the next three years.

The Bank’s Financial Policy Committee (FPC) said this will include £500-per-month hikes for the mortgages of around 420,000 households.

Meanwhile, between one million and 1.5 million people are set to see a second increase in rates, having already fixed to a higher price since interest rates started rising in the second half of 2021.

Alice Haine, at Bestinvest, previously said: “For existing borrowers looking to refinance, they will be hoping the BoE pushes ahead with its next rate cut sooner rather than later.

“Locking in a new deal is vital to avoid reverting onto a lender’s Standard Variable Rate – one of the most expensive forms of mortgage borrowing – but deciding whether a fixed or variable rate is optimal can be confusing.

“This why it is best to secure the services of an independent mortgage broker to make an informed decision.”

Who else tracks house prices?

Halifax is part of Lloyds Group, which is the UK’s biggest mortgage lender.

Its monthly house price index is based on the mortgage data it holds and has been going since 1983.

It’s one of several key barometers of the property market.

The official measure of house prices is from the Office for National Statistics, which uses data from the Land Registry where the actual sold price is recorded.

This is the most accurate of all the indices, but the figures come out three months after the homes are sold, so there’s a big time lag.

Halifax and Nationwide each publish a monthly index tracking the average prices of homes on which they provide mortgages.

While they do adjust their figures to iron out big outliers, both lenders measure average house prices based on the properties they see.

As it’s based on mortgage approvals, this doesn’t include “cash buyers” who buy without needing a mortgage.

Rightmove and Zoopla also publish monthly house price data.

The former is based on asking prices from the property listings on its website.

Zoopla on the other hand uses sold prices, mortgage valuations and data on agreed sales.

Neither property website takes into account the price a property actually sold for like the ONS Land Registry, which could end up being higher or lower – and some might not even sell at all.

Here’s the latest data from other indices:

• ONS – average UK house prices increased by 2.8% to £292,000 in the 12 months to October 2024/
• Halifax – the average UK house price hit £298,083 in November, according to the UK’s biggest mortgage lender.
• Rightmove – the property website said the typical asking price for a home coming onto the market was £360,197 in December.

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