In a surprising turn of events, UK house prices have experienced their first monthly decline since March 2024. According to the latest data from Halifax, the average house price in December was £297,166, representing a 0.2% decrease from November’s figure. This marks a departure from five consecutive months of price increases.
Regional Variations in House Price Growth
While the overall picture is one of decline, there are significant regional variations in house price growth. Northern Ireland leads the way with an annual increase of 7.4%, bringing the average house price to £205,895. Wales follows closely behind with a 4.6% year-on-year rise, taking the average property value to £226,646.
In contrast, Scotland’s annual rate is lower than the rest of the UK, standing at 2.4%. This means that the average house price in Scotland remains relatively stable, sitting at £209,959.
London Remains the Priciest Market
Despite the decline in overall prices, London retains its position as the most expensive housing market in the UK. With an average house price of £547,614, London’s property values are significantly higher than anywhere else in the country. While the annual rate of growth is 3.3%, this represents a slowing down from previous months.
Implications of Stamp Duty Changes
The upcoming changes to stamp duty, which will see the ‘nil rate’ band for first-time buyers shrink from £425,000 to £300,000 in April, are expected to have a significant impact on the market. Amanda Bryden, of Halifax, notes that these changes will motivate prospective first-time buyers to get on the housing ladder and bring forward any home-buying plans.
However, it’s worth noting that only 8% of homes for sale in London will be stamp-duty free for first-time buyers from April. In contrast, a higher proportion of properties in the south-east (24%) and east of England (32%) will be exempt from stamp duty.
Looking Ahead to 2025
Bryden’s forecast for the housing market in 2025 is cautiously optimistic. While mortgage affordability will remain a challenge for many buyers, she expects buyer demand to hold up relatively well, provided employment conditions don’t deteriorate markedly.
Matt Thompson, head of sales at Chestertons, offers a more nuanced view of the current market. He notes that December 2024 was one of the busiest months in years in terms of buyer demand, driven by first-time buyers and second-steppers looking to upsize.
Contrasting Views on Mortgage Rates
Not all experts are aligned with Bryden’s forecast, however. Ashley Webb, UK economist at Capital Economics, suggests that recent rises in mortgage rates may have started to weigh more heavily on the housing market than previously thought.
In contrast, Webb expects mortgage rates to fall further in 2025, potentially even reaching 4.00%. This would lead to a healthy 3.5% rise in house prices, according to his forecast.
Nationwide Figures Offer Different Perspective
Separate figures from Nationwide, which are based on mortgages it approves, show that house prices rose more than expected in December and at the fastest annual rate since October 2022.
Key Statistics:
- Average House Price (December): £297,166
- Monthly Change: -0.2% (from November)
- Annual Change: 3.3%
- Regional Variations:
- Northern Ireland: 7.4% annual growth, average house price £205,895
- Wales: 4.6% year-on-year increase, average property value £226,646
- Scotland: 2.4% annual rate, average house price £209,959
Conclusion
The UK housing market is a complex and dynamic entity, with various factors influencing its performance. While the decline in overall prices may be seen as a negative trend, it’s essential to consider the regional variations and upcoming changes to stamp duty.
As we look ahead to 2025, it’s clear that mortgage affordability will remain a challenge for many buyers. However, with forecasters expecting buyer demand to hold up relatively well, there is still cause for optimism in the housing market.
Whether you’re a first-time buyer or an experienced homeowner, understanding the complexities of the UK housing market is crucial for making informed decisions about your property.
